Things to Avoid While Purchasing a Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. We have listed some things below we suggest you avoid when waiting for your loan to close.
Don't empty your wallet on big-ticket items Although you may be dreaming of ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until your loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a bad idea to make those large purchases with cash. Lenders are looking at your cash on hand when considering your loan.
Don't look for a new job. Lenders look for a consistent job history on your application. Getting a new job before you start the application process for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before your loan is approved, your loan process could fail or be slowed down.
Don't move money around or switch banks. Most lenders will instruct the submission of recent bank statements for your accounts: savings, checking, money market, and other liquid assets. Your lender is looking for a steady rise and fall of your funds over the month, in order to avoid fraud. No matter the reason, moving banks or moving money from one account to another can 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 is yours, not the seller's until the deal closes. Although some FSBO sellers might not know this, any good faith money should go toward your closing expenses. A neutral party, like an attorney can hold your earnest funds, or you may place them temporarily into a trust account until you close. Should your home purchase fail, your purchase agreement should dictate to whom this good faith deposit should go.
At Net Equity Financial Mortgage, we answer questions about this process every day. Call us at (215)741-3131.