Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. It's wise to remember that until you get the keys, your lender is watching you very closely. We have given you a list of things below you will want to stay away from when waiting for closing.
Don't make expensive purchases. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. Using cash to buy big-ticket items can also create a bad idea: many lenders look at your cash on hand when approving your mortgage.
Don't look for a new career. Stability in your work history is a positive thing to lending institutions. Getting a new job before you start the application process for a mortgage may not compromise your approval at all. But for some, getting a new career during the mortgage approval process might bring concern and affect your application.
Don't switch your accounts to a new bank or move around your cash. While your lender considers your loan package, you will likely be required to submit bank statements for the last two or three months for your saving and checking accounts, money market funds and other liquid finances. Your lending institution is looking for a steady rise and fall of your money each pay period, in order to rule out fraud. No matter the purpose, switching banks or transferring funds could raise a red flag with your lender and slow your application process.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") to be considered earnest money. Until the sale is complete, the earnest money actually belongs to you. Your earnest money is to be applied to your expenses upon closing; some FSBO sellers may not know this. Get an attorney or other neutral person who can hang on to the money or put it in a trust account until you close. The contract should specify to whom the money goes if the transaction fails.
At Channel Mortgage LLC, we answer questions about this process every day. Call us: (718) 639-9500.