Don't Trip Yourself up While Buying your New Home
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With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. There are still 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 throw your money around. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until closing. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Since lenders are examining your financial accounts, a large cash purchase is also a bad idea.
Don't get a new career. Lending Institutions feel comfortable seeing a consistent career history on your application. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be slowed down.
Don't take your accounts to a new bank or move around your money. While your lending institution reviews your loan application, you will likely be required to produce bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid wealth. To avoid potential fraud, most lenders need a detailed paper trail to determine the source of all incoming funds. Changing banks or transferring funds elsewhere - for whatever reason - may make it difficult for the lender to document your funds.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any earnest money actually belongs to you. Although your seller might not know this, your good faith funds must be applied to your closing expenses. We recommend that you put the funds into a trust account, or get a neutral person, like a lawyer to hold them until the closing of the sale. The final disposition of good faith funds, if your home purchase fails, should be written in the contract with the seller.
At GENEVA FINANCIAL LLC, we answer questions about this process every day. Call us: 310-975-9739.