Don't Trip Yourself up While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves their loan. There still remain a few major hurdles to jump before closing. Here are some things to avoid during the home buying process to be sure the transaction goes smoothly.
Don't empty your wallet on big-ticket items Although you will be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until your loan closes. Using credit cards to buy furniture could compromise your loan process by altering your numbers dramatically. Because lenders are perusing your financial accounts, a large cash purchase is also not advised.
Don't go on a job search. Your recent work history should show consistency. Getting a new career before you apply for a mortgage may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.
Don't move cash around or switch banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will probably be studied as the lending institution makes decisions regarding your mortgage application. To eliminate potential fraud, most loans require a detailed paper trail to determine the source of all funds. No matter the purpose, changing banks or transferring funds can raise a red flag with your lender and impede your approval process.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") for a "good faith" deposit. Until closing, any good faith deposit actually belongs to you. Your earnest funds are to be applied to your expenses closing; a individual seller may not know this. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until you close. If your sale falls through, your purchase contract should document to whom this good faith funds should go.
Net Equity Financial Mortgage can answer questions about these "Don'ts" and many others. Call us at (215)741-3131.