Things to Avoid While Buying a Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves their loan. It's wise to remember that until your keys are in hand, your lender is watching you very closely. We have listed some actions below you will want to stay away from when waiting for your loan to close.
Don't buy luxury items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. Your lender may send up red flags if you finance your furniture on your credit cards in the middle of your loan process. It's even a red flag to make those big-ticket purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't look for a new job. Lenders feel comfortable seeing a consistent work history on your application forms. Getting a new job may not affect your ability to qualify for a loan - particularly if you are going to be making more money. However, if you switch careers before your loan is approved, your process could fail or be slowed down.
Don't switch your accounts to a new bank or move around your money. Your lending institution will require you to produce recent bank statements on your accounts: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most loans require a detailed paper trail to document the source of all cash. Even for innocent purposes, transferring funds or changing banks could make it more difficult for your lending institution to verify your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your good faith money does not belong to the seller: it remains yours until closing. Any good faith funds are to be used for your expenses upon closing; some sellers might not know this. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until closing. The disposition of good faith funds, if your home purchase falls through, should be indicated in the purchase agreement with your seller.
The Mortgage Exchange Service LLC can walk you through the pitfalls of getting a mortgage. Give us a call at 703.255-5810.