Don't Trip Yourself up While Buying a New Home
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Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves the loan. Keep in mind that until closing, your lender is watching you very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
"DO'S" - PLEASE "DO" the following
DO provide your Earnest Money Deposit from your own personal bank account or acceptable gift funds. Please talk to your loan officer or loan coordinator for additional clarification. This will present a very difficult problem if not managed properly in the beginning.
DO keep originals or be able to access on your employer/bank sites all pay-stubs, bank statements and other important financial documents.
DO provide all documentation for the sale of your current home, including sales contract, closing statement, and employer relocation/buy-out program if applicable.
DO notify your Loan Officer or Loan Coordinator if you plan to receive gift funds for closing. Gift funds are acceptable only if certain criteria are met. Advances from credit cards fro down payment/closing costs are never acceptable.
DO notify your Loan Officer or Loan Coordinator of any employment changes such as recent status, for example, salary to commission.
DO be aware that a new credit report could be pulled just prior to closing.
"DO NOT" - PLEASE "DO NOT" do the following
Don't buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. Because lending institutions are reviewing your bank accounts, a large cash purchase is also a mistake.
Don't go job hunting. Consistency in your career history is a good thing to lenders. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are going to be making more money. 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 cash or close or open any asset accounts without talking with your loan officer about proper documentation required for your loan. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other assets) will be reviewed as the lending institution considers your loan application. Your lending institution looks for a steady rise and fall of your funds over the month, in the interest of ruling out fraud. Even for practical purposes, moving around funds or switching banks may make it more difficult for the lending institution to document your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith deposit actually belongs to you. Any earnest money is to go toward your expenses closing; some FSBO sellers might not know this. Get a lawyer or other neutral party who will hang on to the money or put it in a trust account until you close. The disposition of earnest money, if your sale falls through, should be specified in the purchase agreement with your seller.
DO NOT open or increase any liabilities, including credit cards, student loans or other lines of credit during the loan process as it may impact your qualifying loan amount.
DO NOT call and try to clear up a collection without discussing the possible impact with your Loan Officer. It may show up as "recent activity" on your credit report and lower your score.
DO NOT deposit any monies outside of your automated payroll deposits, particularly cash or sale of personal property, without notifying your Loan Officer or Loan Coordinator. Many guidelines require substantial documentation as to the source of these deposits.
Agape Mortgages Inc can answer questions about these "Do's and Don'ts" and many others. Call us: 503-253-3299.