Don't Trip Yourself up While Buying your New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the loan is approved. There are still a few major hurdles to jump before your loan closes. We have given you a list of things below we suggest you stay away from when waiting for your loan to close.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until the loan closes. You may send up red flags with your lender if you finance your electronics on your credit cards in the middle of your loan process. It's also a mistake to make those large purchases with cash. Lenders are looking at your cash on hand when considering your loan.
Don't look for a new career. Lending Institutions look for a consistent job history on your paperwork. Finding a new job (especially one with a better paycheck) may not affect your ability to qualify for your mortgage loan. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for all of your accounts (checking, savings, money market, and others) will probably be analyzed as the lending institution considers your approval. To avoid potential fraud, most lending institutions require a detailed paper trail to document the source of all incoming funds. No matter the purpose, moving banks or moving funds from one account to another can raise a red flag with the lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Some FSBO sellers may not know that the good faith funds must be used for your expenses upon closing. Find an attorney or other neutral person who will hold the deposit or put it in a trust account until you close. The disposition of good faith money, if your transaction falls through, should be written in the purchase agreement with the seller.
At Capacity Lending, LLC, we answer questions about this process every day. Give us a call: 469-640-0400.