Things to Avoid While Purchasing a New Home
What's more fun than getting a bunch of new furniture to adorn your future home? Nothing. But buying big ticket items before closing can be harmful. It's best to remember that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be tempted to order that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making major buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Since lending institutions are examining your bank accounts, a large cash purchase is also a mistake.
Don't look for a new job. Stability in your career history is a good thing to lenders. Getting a new career before you start the application process for a mortgage may not get in the way of your approval at all. However, switching careers during your loan process may influence your approval.
Don't move money around or switch banks. As your lending institution considers your mortgage package, you will likely be instructed to produce bank statements for the last few months on your checking accounts, savings accounts, money market accounts and other liquid assets. The lending institution looks for a steady flow of your money each month, in the interest of avoiding fraud. No matter the reason, changing banks or moving money from one account to another could raise a red flag with your lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller up until the deal closes. The earnest funds are to go toward your expenses upon closing; the FSBO seller might not know this. Find an attorney or other neutral party who is able to hang on to the funds or put them in a trust account until closing. If your sale falls through, the contract with the seller should dictate where your good faith funds should go.
The Mortgage Exchange Service LLC can answer questions about these "Don'ts" and many others. Call us: 703.255-5810.