Things to Avoid While Purchasing a New Home
What's better than buying a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until your loan closes, there are still some hurdles to jump. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. Because lending institutions are looking closely at your financial accounts, a large cash purchase is also a mistake.
Don't go on a job search. Your recent career history should show consistency. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. However, if you switch careers before approval, your loan process could fail or be bogged down.
Don't move money around or switch banks. Your lender will ask for recent bank statements of all of your accounts: checking, savings, money market, and other liquid assets. In order to avoid fraud, lenders want to see clear documentation of how you earn your living and where additional funds come from. Even for practical purposes, transferring funds or changing banks could make it more difficult for the lender to verify your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until the completion of the deal, the good faith deposit actually belongs to you. Although your seller might not know this, any good faith funds must be applied to your closing expenses. We recommend that you put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. The final disposition of good faith money, in the case of a failed transaction, should be specified in the contract with your seller.
The Mortgage Exchange Service LLC can answer questions about these "Don'ts" and many others. Give us a call: 703.255-5810.