Dont's When Purchasing a House
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What's better than buying a bunch of new furnishings to adorn your future home? Not much. But making large purchases prior to your loan closing could be trouble. There still remain a few major hurdles to overcome before the house is really yours. We have listed some actions below you will want to stay away from when waiting for your loan to close. Remember, there is a BIG difference between the loan closing and receiving a Clear to Close from underwriting.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, electronics, appliances, or vacations until your loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.
Don't go job hunting. Lenders like to see a consistent job history on your paperwork. Getting a new career before you apply for a mortgage may not compromise your approval at all. However, getting a new career in the middle of your application process may influence your approval.
Don't switch banks or move finances around in your accounts. As the lender reviews your mortgage application, you will probably be required to provide bank statements for recent months for your savings and checking accounts, money market funds and other liquid wealth. To detect potential fraud, most lending institutions require a detailed paper trail to verify the source of all funds. Even for innocent purposes, transferring finances or switching banks might make it harder for the lender to verify your account history.
Don't give cash directly to your seller (commonly in the case of a "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it is actually yours until closing. Although your FSBO seller may not realize this, any earnest money should be applied to the buyer's closing expenses. A neutral party, like an attorney or title agent can hold onto your earnest money, or you may put it temporarily into a trust account until closing. The contract should document to whom the deposit goes if the transaction falls through.
Integrity Lending can answer questions about these "Don'ts" and many others. Give us a call: 941-924-0044.