What to Avoid During a Home Purchase
With the thrill 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. There are still a few major hurdles to jump before your loan closes. We have listed some things below you will want to stay away from when waiting for closing.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy new living room furniture could compromise your lending process by distorting your numbers. Using cash to buy big-ticket items can also create a problem: most lenders look at your available cash when approving your mortgage loan.
Don't get a new career. Your recent job history should show consistency. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. But for some people, getting a new career during the loan application process could bring concern and affect your approval.
Don't switch your accounts to a new bank or move around your finances. Bank statements from recent months for accounts in your name (savings, checking, money market, and others) will likely be analyzed as the lender makes decisions regarding your mortgage application. To avoid fraud, lenders look for a clear and consistent picture of how you earn your money and where additional funds come from. Even for practical reasons, moving around finances or changing banks may make it harder for the lending institution to document your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller up until the sale is final. Although some FSBO sellers might not know this, the earnest money must go toward your closing expenses. An attorney or other type of neutral party can hold onto your funds, or you may put them temporarily into a trust account until you close. Should your sale fall through, your contract with the seller should document where the good faith deposit should go.
At Net Equity Financial Mortgage, we answer questions about this process every day. Call us at (215)741-3131.