Things to Avoid While Buying a New Home
What's more fun than getting a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Keep in mind that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be tempted to order that new easy-chair for the soon-to-be-yours parlor, but it's advisable to stay away from making large buys like furniture, appliances, jewelry, or vacations until closing. Using plastic to buy furniture could jeopardize your lending process by altering your numbers dramatically. Using cash to buy expensive items can even create a problem: most lending institutions look at your cash on hand when approving your mortgage loan.
Don't go on a job search. Consistency in your career history is a good thing to lenders. Getting a new job before you start the application process for a mortgage may not jeopardize your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't move cash around or change banks. Bank statements from the last few months for all of your accounts (checking, savings, money market, and other accounts) will be reviewed as the lender considers your mortgage application. To detect fraud, lenders want to see a clear and consistent picture of how you earn your living and where additional funds come from. No matter the reason, changing banks or moving funds from one account to another could raise a red flag with the lender and slow your qualification 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 up until closing. The earnest money is to go toward your expenses closing; some individual sellers may not understand this. An attorney or other type of neutral party can hold onto your earnest money, or you may put it temporarily into a trust account until closing. The contract should dictate where the deposit goes if the transaction fails.
Net Equity Financial Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: (215)741-3131.