What to Avoid During your Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before your loan closes. We have listed some things below we suggest you avoid when waiting for your loan to close.
Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy furniture could jeopardize your loan process by distorting your numbers. It's even a mistake to make those big purchases using cash. Lending Institutions are looking at your available cash when considering your loan.
Don't get a new job. Lending Institutions like to see a consistent career history on your application. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, if you switch careers before approval, your process could fail or be slowed down.
Don't move finances around or change banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other assets) will probably be reviewed as the lending institution considers your mortgage application. In order to detect fraud, lenders require a clear and consistent picture of how you earn your money and where additional funds come from. No matter the purpose, switching banks or transferring money might raise a red flag with your lender and slow your qualification process.
Don't give cash directly to your seller (usually in cases of "for sale by owner") to be considered a "good faith" deposit. Until the completion of the deal, any good faith money actually belongs to you. Your seller might not know that any good faith funds should go toward your expenses at closing. Find a lawyer or other neutral person who is able to hold the funds or put them in a trust account until you close. The final disposition of earnest funds, in the case of a failed transaction, should be specified in the contract with the seller.
Net Equity Financial Mortgage can answer questions about these "Don'ts" and many others. Give us a call: (215)741-3131.