What to Avoid During your Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves their loan. Until your loan closes, there are still some hurdles to jump. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't make expensive purchases. Although you will be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and vehicle purchases until your loan closes. Financing new furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Because lenders are examining your financial accounts, a large cash purchase is also a bad idea.
Don't get a new career. Consistency in your work history is a positive thing to lenders. Getting a new job before you apply for a loan may not affect your approval at all. However, switching careers during the approval process may influence whether or not you are approved.
Don't move money around or switch banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will likely be reviewed as the lending institution considers your loan application. To detect fraud, lenders want to see a consistent portrayal of how you earn your living and where additional wealth comes from. No matter the reason, switching banks or transferring money can raise a red flag with your lender and slow your approval 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 money is yours, not the seller's until closing. Although your seller may not realize this, any earnest money should go toward your closing expenses. It's advisable to put the money into a trust account, or get an attorney to hold it until the deal closes. Your contract should dictate who keeps the deposit if the home purchase falls through.
Net Equity Financial Mortgage can answer questions about these "Don'ts" and many others. Give us a call at (215)741-3131.