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 accepts their offer and the loan is approved. Until your keys are in hand, there are still some hurdles to jump. Here are some actions to stay clear of before closing to be sure your transaction goes smoothly.
Don't empty your wallet on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and car purchases until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to buy expensive items can even be a mistake: most lenders consider your cash reserve when approving your mortgage loan.
Don't go on a job search. Stability in your work history is a positive thing to lenders. Finding a new career (particularly one with a bigger salary) may not affect your ability to qualify for a mortgage. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't move cash around or change banks. Your lending institution will instruct the submission of recent bank statements for your accounts: savings, checking, money market, and other assets. To avoid potential fraud, most lenders want a detailed paper trail to determine the source of all funds. Even for practical reasons, transferring finances or changing banks may make it more difficult for the lender to confirm your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Your seller may not realize that the good faith funds must go toward your expenses upon closing. A neutral party, like an attorney can hold your funds, or you may place them temporarily into a trust account until closing. The disposition of good faith funds, if your transaction fails, should be written in the contract with your seller.
Net Equity Financial Mortgage can answer questions about these "Don'ts" and many others. Call us at (215)741-3131.