Things to Avoid While Buying a New Home
What's better than buying a bunch of new furniture to go in your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until your loan closes, there are still some hoops to jump through. Here are some things to refrain from during the home buying process to assure the transaction goes smoothly.
Don't buy luxury items. It may be tempting to buy that new couch for the soon-to-be-yours parlor, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. It's even a bad idea to make those large purchases with cash. Lending Institutions are examining your available cash when considering your loan.
Don't look for a new job. Consistency in your work history is a good thing to lending institutions. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are going to be making more money. But in some cases, changing careers during the loan approval process might raise concern and affect your application.
Don't switch banks or move cash around in your bank accounts. Your lending institution will ask for recent bank statements of accounts in your name: savings, checking, money market, and other liquid assets. To detect potential fraud, most lenders want detailed paperwork to verify the source of all incoming funds. Switching banks or moving finances to another account - no matter the purpose - may hinder the review of your accounts.
Don't give cash directly to your seller (commonly in the case of of "for sale by owner") to be used as earnest money. Your earnest money does not belong to the seller: it is actually yours until the sale closes. Although some FSBO sellers might not realize this, the earnest money must be used for the buyer's closing expenses. A neutral party, like an attorney can hold onto your earnest funds, or you may put them temporarily into a trust account until you close. The final disposition of good faith money, if your home purchase falls through, should be included in the contract with your seller.
Net Equity Financial Mortgage can answer questions about these "Don'ts" and many others. Give us a call: (215)741-3131.