Don't Trip Yourself up While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. There still remain a few major hurdles to jump before the house is realy yours. We have listed some actions below we suggest you stay away from when waiting for closing.
Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. You may send up red flags with your lender if you purchase your appliances on your credit cards in the middle of your loan process. It's also a red flag to make those big-ticket purchases using cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't go on a job search. Your recent job history should show stability. Finding a new job (particularly one with a bigger paycheck) may not hinder your ability to qualify for your loan. But for some people, switching jobs during the loan application process could raise concern and affect your approval.
Don't switch banks or move finances around in your bank accounts. Most lenders will require you to produce recent bank statements of all of your accounts: savings, checking, money market, and other assets. To detect fraud, lenders will need clear documentation of how you earn your living and where additional funds come from. Even for innocent purposes, transferring cash or changing banks may make it harder for the lender to document your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your good faith deposit belongs to you, not to the seller up until the deal closes. Although some individual sellers may not understand this, your good faith money must go toward your closing expenses. You'll want to put the funds into a trust account, or get an attorney to hold them until the deal closes. If your transaction fails, the purchase agreement should indicate to whom the good faith funds should go.
Farm Credit of the Virginias can answer questions about these "Don'ts" and many others. Call us at (800) 919-3276.