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You're all excited because the sellers have just accepted your Purchase Agreement and you're going to have a new home! Congratulations to you but you aren't finished with the process yet. You still have to have final underwriting approval on your mortgage loan before you can close on your purchase and move into your new home. Pre-approval does not mean the process is at all complete. Until the loan is closed, there are several things you should avoid doing. THIS ALSO APPLIES DURING THE PROCESSING OF A REFINANCE!
Don't make an expensive purchase. Its best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. Financing that furniture with a store credit card or even one of your own credit cards could jeopardize your credit worthiness during the time it means the most. LENDERS ARE NOW CHECKING YOUR CREDIT REPORT JUST BEFORE CLOSING! A NEW PURCHASE WILL CHANGE YOUR DEBT TO INCOME RATIO AND MAY CHANGE YOUR CREDIT SCORE, TOO. Please talk to us before making a purchase so we can advise you in your particular situation. Using cash to purchase big items can also create a problem because many banks take into consideration your cash reserve when approving your mortgage.
Don't get a new job.Lenders like to see a consistent job history. Generally, changing jobs will not affect your ability to qualify for a mortgage loan - especially if you are going to be making more money. But for some people, getting a new job during the loan approval process could raise some concern and affect your application. This is especially true if the job change will occur between the time of loan approval and closing on your loan. Most lenders will call your employer to confirm that you are still employed there within a week before you close on your loan. If you are making a job change, please tell us so we can advise you the best way to present it to the underwriter.
Don't switch banks or move money around. As your lender reviews your loan package, you will likely be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds. Changing banks or transferring money to another account - even if its just to consolidate funds - could make it difficult for the lender to document your funds.Lenders will require a paper trail on ALL large deposits into your accounts. Again, if it is necessary to do this during the loan process, tell us about it so we can be prepared to direct you as to the information we will need.
Don't give a good faith deposit directly to the seller in a FSBO purchase. As a rule, your good faith deposit belongs to you, not to the seller, until the deal closes. Your FSBO seller may not know that your good faith funds should be applied to your expenses at closing. We can help you by having the deposit put into the trust account at the title company. Or, get an attorney or other neutral party who can hold the deposit or put it in a trust account until you close on the home. Your purchase contract should dictate to whom the funds go should the transaction fall through.
Don't disregard your lenders requirements. You may have been pre-approved for the loan but our work with the lender is far from over. In order to process your loan, you need to meet certain requirements. We will need copies of your bank statements, W2s and other paperwork. It is up to you to get items to us as soon as possible. Failure to submit certain qualifying documents could cause you to lose your loan and the financing you need to buy your home.