What NOT to do when you are under contract on a home –and what to do instead
Mortgage "Dos" & "Don'ts"
When you have gone under contract on a home and are in the 30-45 day process before closing? If so, here is what you should and should not be doing to ensure smooth sailing in your transaction.
1. DON’T: Packing up Important Documents.
While it is a great idea to start packing and preparing for the move into your new home make sure you DO NOT pack up your important financial documents before closing! This is a common mistake buyers make and it can create a big headache for you and you lender. To avoid bumps, keep all important financial documents accessible until you are officially closed.
2. DON’T: Take out new lines of credit or add new debt before closing.
It can be oh so tempting to take out a new credit card to fund all the furniture you are going to buy for your new home –especially one with a great rewards program. Unfortunately, that is a big no no! Control yourself, or check first with you lender. After closing you are free to get that credit card and rack up all the points. (***Same thing applies to any new debt. Do not buy a boat, a car, etc. before closing!)
3. DO: Gift funds from family members.
When purchasing a new home, tell anybody and everybody in your family who might want to provide you with some gift funds for your new home purchase. Gift funds from family members are a DO!
4. DON’T: Cash or non-sourced funds.
Due to the tightening of lending practices, cash or any unsourced funds will show up as a big red flag. Make sure any large deposits or transfer of funds before closing can be sourced.
5: DON’T: Change jobs –or quit your job– before closing
During the 30-45 day period you want to avoid any big changes –especially when it comes to your job. If the job of a lifetime does come around, just connect with your lender and let them help you navigate it in a way that will not blow up your home purchase.
6. DON’T: “Google it” or make big changes without your lenders knowledge
Just don’t. Remember that your lender is your best friend during your home purchase.
7: DO: Liquidate Funds or take a loan against 401k
If you want to get access to more funds, let your lender know. Liquidating assets or taking a loan against your 401k to use as your downpayment is definitely a do! That being said it is critical to discuss with your lender beforehand to ensure it will not cause any problems with the funding of your loan.
8: DON’T: Stop paying monthly bills
No matter the reason, you have to continue to pay all your bills as normal. It is vital that you continue to pay mortgages, rents, credit card bills, etc. to ensure a smooth path to closing.
9: DO: Talk to your lender and realtor throughout the whole process
Call us, text us, or email us. We are on your side and no question is a stupid question. 🙂