Don't Trip Yourself up While Buying a Home
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But making large purchases before your loan closes can be an error. Until the house is really yours, there are still some hurdles to jump. Here are some actions to refrain from before closing to be sure your transaction goes well.
Don't throw your money around. You may be itching to buy that new couch for the soon-to-be-yours den, but it's best to stay away from making big ticket purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. You may send up red flags with your lender if you buy new furniture on your credit cards in the middle of your loan process. It's even a mistake to make those large purchases with cash. Lenders are examining your cash reserve when considering your loan.
Don't get a new career. Lenders look for a consistent work history on your paperwork. Getting a new job may not affect your ability to qualify for a loan - particularly if you are improving your salary. But for some, switching jobs during the loan application process could bring concern and stymie your application.
Don't switch banks or move money around in your accounts. Your lender will instruct the submission of recent bank statements for your accounts: checking, savings, money market, and other assets. In order to detect fraud, lenders require clear documentation of how you earn your living and where additional funds come from. Changing banks or moving money to another account - even if its just to pool funds - might hinder the review of your funds.
Don't give money directly to your seller (usually in the case of of "for sale by owner") for earnest money. Until the sale is complete, the good faith money actually belongs to you. The good faith money is to be applied to your expenses upon closing; the FSBO seller might not know this. Find an attorney or other neutral party who can hang on to the funds or place them in a trust account until you close. The disposition of good faith money, in the case of a failed transaction, should be included in the purchase agreement with the seller.
Real Property Finance can answer questions about these "Don'ts" and many others. Call us at 310-379-5997.
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