What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. It's wise to remember that until closing, your lender is watching your finances very closely. Here are some actions to refrain from during the home buying process to be sure your transaction goes smoothly.
Don't buy big-ticket items. Although you will be listing ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and car purchases until the closing of your loan. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to buy big items can also be an issue: many banks look at your cash reserve when approving your loan.
Don't look for a new career. Your recent career history should show stability. Getting a new job before you start the application process for a mortgage may not compromise your approval at all. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't switch banks or move money around in your accounts. As your lender reviews your mortgage package, you will probably be required to produce bank statements for recent months on your checking accounts, savings accounts, money market accounts and other liquid finances. To avoid potential fraud, most lenders want a thorough paper trail to determine the source of all incoming funds. Even for innocent purposes, transferring finances or changing banks might make it harder for the lending institution to confirm your bank history.
Don't give money directly to your seller (usually in cases of "for sale by owner") to be used as earnest money. Your good faith money does not belong to the seller: it remains yours until closing. Any earnest money is to go toward your expenses closing; some sellers may not know this. It's wise to put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. Should your sale fall through, the purchase contract should indicate to whom your earnest money should go.
Net Equity Financial Mortgage can answer questions about these "Don'ts" and many others. Call us: (215)741-3131.