Don’t Spend Your Savings!
Have funds set aside for costs that are associated with buying a home – earnest money, appraisal fee, home inspections, closing costs and down payment. However, you need to keep money saved for other reasons. If you’re going from being a renter to a homeowner, keep in mind that all maintenance expenses will now be your responsibility. When you were renting, if an appliance broke or a plumber was needed, all you had to do was call your landlord/property manager. As a homeowner, you will now have to pay for all repairs and other expenses, such as pest control. Also, it’s in your best interest to have emergency funds in case you become ill or unemployed unexpectedly.
Don’t Move Money Without A Paper Trail!
When you’re in the process of buying a home, all large deposits and withdrawals need to be well documented. Before you go to closing, the underwriter/lender will check your bank accounts. Provide documentation that proves the source for large deposits. Why? The lender is ensuring you haven’t opened another credit account that will have a negative effect on your credit application. If a relative gives you money for your home, have him/her write a letter stating that it is a gift. For a large withdrawal, the lender will want to make sure a big purchase wasn’t made. Also, the withdrawal decreases the amount of cash savings your pre-approval was based upon and will throw things off when it’s time to proceed to closing.
