Don't Trip Yourself up While Buying your Home
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With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. It's wise to remember that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't overspend on big-ticket items It may be tempting to order that new sofa for the soon-to-be-yours parlor, but it's best to stay away from making big ticket purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your lender may send up red flags if you purchase your electronics on your credit cards in the middle of your loan process. Since lenders are perusing your bank accounts, a large cash purchase is also not advised.
Don't look for a new job. Your recent career history should show consistency. Finding a new career (particularly one with a bigger salary) may not hinder your ability to qualify for your loan. However, if you switch careers before approval, your process could fail or be slowed down.
Don't change banks or move money around in your bank accounts. As the lending institution considers your loan application, you will probably be asked to submit bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid finances. To avoid fraud, lenders need clear documentation of how you earn your money and where any additional money comes from. Changing banks or transferring money elsewhere - even if its merely to pool funds - might hinder the review of your funds.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. Your good faith money does not belong to the seller: it is actually yours until the sale closes. The earnest funds are to go toward your expenses upon closing; some individual sellers might not realize this. You'll need to put the funds into a trust account, or get a neutral person, like an attorney to hold them until closing. Your purchase agreement should dictate who gets the deposit if the home purchase fails.
Affordable Mortgage Financing, LLC. can answer questions about these "Don'ts" and many others. Call us: (608) 372-9222.