Don't Trip Yourself up While Buying a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. Until the keys are handed over, there still remain some hoops to jump through. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't make expensive purchases. You may be tempted to buy that new Turkish rug for the soon-to-be-yours den, but it's advisable to avoid making big ticket buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. Because lenders are reviewing your financial accounts, a large cash purchase is also a bad idea.
Don't go on a career search. Your recent work history should show consistency. Finding a new career (especially one with a better salary) may not change your ability to qualify for your mortgage loan. But in some cases, getting a new job during the mortgage approval process may bring concern and affect your application.
Don't take your accounts to a new bank or move around your finances. As the lending institution considers your mortgage package, you will probably be instructed to produce bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid wealth. To detect potential fraud, most loans require a thorough paper trail to determine the source of all cash. No matter the purpose, switching banks or transferring funds can raise a red flag with your lender and impede your approval process.
Don't give money directly to your seller (commonly in the case of of "for sale by owner") for earnest money. As a rule, your earnest money belongs to you, not the seller up until the sale is final. Although your seller may not know this, any good faith money must go toward the buyer's closing expenses. An attorney or other type of neutral party can hold your earnest funds, or you may place them temporarily into a trust account until you close. The final disposition of earnest money, in the case of a failed transaction, should be specified in the purchase agreement with the seller.
At The Mortgage Exchange Service LLC, we answer questions about this process every day. Call us at 703.255-5810.