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 mistake of carrying their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items 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 major purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. It's also a bad idea to make those big purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't go on a job search. Lending Institutions feel comfortable seeing a consistent job history on your application. Getting a new job before you start the application process for a loan may not get in the way of your approval at all. However, if you switch careers before approval, your loan process could fail or be slowed down.
Don't switch your accounts to a new bank or move around your money. Your lender will instruct the submission of recent bank statements for all of your accounts: savings, checking, money market, and other assets. To detect fraud, lenders require clear documentation of how you earn your living and where any additional money comes from. Switching banks or moving funds to another account - even if its merely to pool funds - may hinder the documentation of your funds.
Don't give funds directly to your seller (generally in cases of "for sale by owner") for earnest money. Your good faith money does not belong to the seller: it is actually yours until closing. Although some individual sellers might not understand this, your earnest money should go toward the buyer's closing expenses. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until closing. If your sale falls through, your contract with the seller should document to whom the good faith deposit should go.