Having a mortgage approval can indeed cause a lot of excitement. It can make you rush to a furniture store or mall in preparation for a significant life change. However, mortgage approval is just the first step to closing your loan; you still have a long way to go.
So, how long does closing on a house take?
It will take at least one month from the day your buying offer is accepted to the day you will be given the keys. Deciding to skip any of these steps can jeopardize your purchase and take you back to the first step. Therefore, do not do anything that will cut short your excitement. Below are some of the things you should avoid and what to expect when closing on a house.
It is normal to yearn for a magazine-worthy kitchen or want to celebrate your dream home with new furnishings. Even so, do not overspend on expensive furniture, vacations, cars and appliances, among others until you close the loan.
Deciding to make a vast payment using plastic money can change the credit numbers really quick. On the other hand, utilizing cash for the same purpose is also a huge mistake. That is because the lenders will examine the money in your hands before they grant you a loan.
Lenders will approve your loan based on your current income. Your steady flow of employment is what will convince them that you can pay back the borrowed funds.
Imagine what could happen if your lenders called your former workplace only to discover that you no longer work there? Well, it can raise a lot of issues. Most importantly, it can delay your loan closing or even prevent you from ever doing it.
To rule out the chances of fraud, your lenders will ask you to submit your last three months’ bank statements. In the process, they will check your savings account, money market funds, checking account and any other liquid wealth. The process can also help them to determine whether you have a steady flow of funds to enable you to pay back the loan.
So, numerous fluctuations on your bank balances can land you into trouble. Therefore, let the money stay where it is until the closing process is over.
You should always have in mind that the seller does not own your good faith deposit. He or she should also be aware that the money will be used to pay your expenses at the closing. The funds are supposed to be yours until the successful completion of a transaction.
In respect to that, a neutral party such as an attorney may be required to keep the earnest funds for you. Alternatively, you can also temporarily put the money into your trust account until the closing process is over. In case the transaction fails, the agreement of purchase will give directions indicating the rightful owner of the good faith deposit.
The process of transferring homeownership can undoubtedly be stressful. Many things take place within this short period of time. Making any drastic financial changes while applying can complicate everything and even lead to a mortgage company denying your loan application.
Nevertheless, do not give up. It is possible to avoid this. All you have to do is to take your time to understand the home purchase process. The above information can also save you from making mistakes before your loan closes.
People often feel like they’re not in a financial position to buy a home, but that might not be true. If you have a good credit history and a steady job, you may be closer to owning a home than you realize. Stop throwing money away on rent and talk to one of our mortgage specialists today!