Don't Trip Yourself up 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 loan is approved. Keep in mind that until you get the keys, your lender is watching you very closely. We have given you a list of actions below we suggest you avoid when waiting for closing.
Don't overspend on big-ticket items It may be tempting to order that new couch for the soon-to-be-yours den, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. Using plastic to buy new living room furniture could compromise your loan process by distorting your numbers. It's also a bad idea to make those huge purchases using cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't go on a job search. Lenders like to see a consistent career history on your application forms. Finding a new career (especially one with a better salary) may not jeopardize your ability to qualify for your mortgage loan. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. Your lender will instruct the submission of recent bank statements on your accounts: checking, savings, money market, and other liquid assets. In order to detect fraud, lenders want to see clear documentation of how you earn your money and where any additional funds come from. No matter the purpose, switching banks or moving funds from one account to another may raise a red flag with the lender and slow down your qualification process.
Don't give money directly to your seller (commonly in cases of "for sale by owner") for a "good faith" deposit. As a rule, your good faith deposit belongs to you, not the seller up until the deal closes. Although your FSBO seller might not understand this, the good faith money should be applied to your closing expenses. You'll need to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. Should your sale fall through, the contract with the seller should document where this earnest money should go.
The Mortgage Exchange Service LLC can walk you through the pitfalls of getting a mortgage. Give us a call: 703.255-5810.