What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves the loan. Until the keys are handed over, there still remain some hurdles to jump. We have listed some things below you will want to avoid when waiting for closing.
Don't make expensive purchases. Although you may be planning ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. You may send up red flags with your lender if you finance your furniture on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also create a mistake: most lenders take into consideration your available cash when approving your mortgage.
Don't look for a new job. Your recent work history should show consistency. Getting a new job before you start the application process for a loan may not affect your approval at all. However, getting a new job in the middle of your application process may influence whether or not you are approved.
Don't change banks or move money around in your accounts. Most lenders will instruct the submission of recent bank statements on all of your accounts: savings, checking, money market, and other assets. The lender is looking for a steady flow of your money each month, in the interest of avoiding fraud. Switching banks or transferring finances to another account - even if its merely to pool funds - may hinder the review of your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith deposit remains yours. Your earnest money is to be applied to your expenses closing; a individual seller might not realize this. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. Should your home purchase fail, the purchase agreement should specify to whom your earnest money should go.
The Mortgage Exchange Service LLC can walk you through the pitfalls of getting a mortgage. Call us: 703.255-5810.