Things to Avoid While Purchasing a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before closing. We have listed some actions below you will want to stay away from when waiting for your loan to close.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. Because lenders are looking closely at your bank accounts, a large cash purchase is also a bad idea.
Don't look for a new career. Lending Institutions feel comfortable seeing a consistent career history on your application. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are going to be making more money. However, if you switch careers before you qualify, your loan process could fail or be stalled.
Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will likely be reviewed as the lending institution makes decisions regarding your application. In order to avoid fraud, lenders require clear documentation of how you earn your money and where additional wealth comes from. Changing banks or transferring finances elsewhere - no matter the purpose - might make it difficult for the lender to verify your funds.
Don't give cash directly to your seller (usually in cases of "for sale by owner") for earnest money. Until the completion of the deal, the good faith deposit remains yours. Although your seller may not understand this, any earnest money must be applied to your closing expenses. Find a lawyer or other neutral party who will hold the funds or place them in a trust account until you close. The final disposition of good faith funds, if your home purchase fails, should be indicated in the purchase agreement with your seller.
At The Mortgage Exchange Service LLC, we answer questions about this process every day. Give us a call at 703.255-5810.