Things to Avoid While Buying a Home
What's more fun than buying a bunch of new furniture to adorn your future home? Not much. But making large purchases before closing could be trouble. Until your keys are in hand, there still remain some hurdles to jump. Here are some things to avoid during the home buying process to assure the transaction goes well.
Don't make expensive purchases. Although you will be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you finance your electronics on your credit cards in the middle of your loan process. Since lenders are looking closely at your bank accounts, a large cash purchase is also a mistake.
Don't get a new career. Your recent job history should show stability. Finding a new career (especially one with a better salary) may not hinder your ability to qualify for your mortgage loan. However, switching jobs during your application process might affect your approval.
Don't take your accounts to a new bank or move around your cash. Bank statements from the last two or three months for your accounts (savings, checking, money market, and other accounts) will be studied as the lender considers your mortgage application. In order to detect fraud, lenders look for a clear and consistent picture of how you earn your living and where additional wealth comes from. Switching banks or transferring funds elsewhere - even if its just to pool funds - might make it difficult for your lender to document your funds.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your earnest money is yours, not the seller's up until the deal closes. A FSBO seller may not realize that the earnest money must be applied to your expenses at closing. We recommend that you put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. Your purchase contract should document who gets the money if the home purchase fails.
At Net Equity Financial Mortgage, we answer questions about this process every day. Give us a call at (215)741-3131.