Things to Avoid While Purchasing a Home
What's more fun than buying a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before closing can be an error. Until the house is really yours, there still remain some hoops to jump through. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't make expensive purchases. Although you may be dreaming of ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until your loan closes. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Using cash to purchase big items can even create an issue: many lending institutions look at your cash reserve when approving your mortgage loan.
Don't get a new job. Consistency in your job history is a positive thing to banks and other lenders. Finding a new job (particularly one with a bump in salary) may not affect your ability to qualify for a mortgage loan. But for some, changing jobs during the loan approval process might bring concern and affect your application.
Don't switch your accounts to a new bank or move around your finances. As your lender considers your loan application, you will probably be required to produce bank statements for the last few months for your saving and checking accounts, money market funds and other liquid wealth. The lender looks for a consistent flow of your money over the month, in the interest of avoiding fraud. No matter the purpose, changing banks or transferring money could raise a red flag with the lender and slow your approval process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Your seller may not realize that the good faith money is to be applied to your expenses at closing. An attorney or other type of neutral party can hold your earnest money, or you may put it temporarily into a trust account until you close. Should your sale fall through, your contract with the seller should document where the good faith funds should go.
The Mortgage Exchange Service LLC can answer questions about these "Don'ts" and many others. Call us at 703.255-5810.