Don't Trip Yourself up While Buying your Home
What's more fun than getting a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes could be trouble. It's wise to remember that until closing, your lender is watching you very closely. Here are some things to refrain from during the home buying process to be sure the transaction goes well.
Don't overspend on big-ticket items It may be tempting to order that new sofa for the soon-to-be-yours den, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Your lender may send up red flags if you buy new furniture on your credit cards in the middle of your loan process. Using cash to buy big-ticket items can also create an issue: many banks look at your available cash when approving your mortgage.
Don't get a new job. Lending Institutions look for a consistent work history on your application. Finding a new job (especially one with a better salary) may not hinder your ability to qualify for a mortgage loan. However, switching careers in the middle of your approval process may affect your approval.
Don't switch your accounts to a new bank or move around your money. While the lender considers your mortgage application, you will likely be instructed to submit bank statements for the last few months on your checking accounts, savings accounts, money market accounts and other liquid wealth. The lending institution is looking for a consistent rise and fall of your funds each pay period, in order to avoid fraud. No matter the purpose, switching banks or moving money from one account to another could raise a red flag with the lender and impede your application process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until closing, the earnest money actually belongs to you. A FSBO seller may not realize that any good faith money is to be applied to your expenses upon closing. You'll want to put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. Your purchase contract should indicate where the money goes if the transaction does not go through.
At Longhorn Mortgage, we answer questions about this process every day. Call us: 512-302-9410.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.