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Things Not to Do Before Purchasing a Home
No Major Purchase of Any Kind
Review the article titled, "Don’t Buy a Car," and apply it to any major purchase
that would create debt of any kind. This includes furniture, appliances,
electronic equipment, jewelry, vacations, expensive weddings…
…and automobiles, of course.
Don’t Move Money Around
When a lender reviews your loan package for approval, one of the things they are
concerned about is the source of funds for your down payment and closing costs.
Most likely, you will be asked to provide statements for the last two or three
months on any of your liquid assets. This includes checking accounts, savings
accounts, money market funds, certificates of deposit, stock statements, mutual
funds, and even your company 401K and retirement accounts.
If you have been moving money between accounts during that time, there may be
large deposits and withdrawals in some of them.
The mortgage underwriter (the person who actually approves your loan) will
probably require a complete paper trail of all the withdrawals and deposits. You
may be required to produce cancelled checks, deposit receipts, and other
seemingly inconsequential data, which could get quite tedious.
Perhaps you become exasperated at your lender, but they are only doing their job
correctly. To ensure quality control and eliminate potential fraud, it is a
requirement on most loans to completely document the source of all funds. Moving
your money around, even if you are consolidating your funds to make it "easier,"
could make it more difficult for the lender to properly document.
So leave your money where it is until you talk to a loan officer.
Oh…don’t change banks, either.
Should You Change Jobs?
For most people, changing employers will not really affect your ability to
qualify for a mortgage loan, especially if you are going to be earning more
money. For some homebuyers, however, the effects of changing jobs can be
disastrous to your loan application.
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