What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until your loan closes, there still remain some hurdles to jump. We have listed some things below we suggest you avoid when waiting for your loan to close.
Don't buy luxury items. You may be itching to buy that new sofa for the soon-to-be-yours den, but it's best to avoid making big ticket purchases like furniture, appliances, electronic equipment, or vacations until closing. Using plastic to buy furniture could jeopardize your loan process by distorting your numbers. Since lenders are perusing your financial accounts, a large cash purchase is also a mistake.
Don't look for a new career. Lenders like to see a consistent job history on your paperwork. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are getting a bigger paycheck. But for some, switching jobs during the loan approval process may bring concern and affect your application.
Don't move cash around or switch banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other accounts) will probably be reviewed as the lending institution considers your mortgage application. To avoid potential fraud, most lending institutions need thorough paperwork to document the source of all incoming funds. No matter the reason, switching banks or transferring money could raise a red flag with your lender and slow down your qualification process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until closing. Some sellers may not realize that the earnest money should be applied to your expenses at closing. Find an attorney or other neutral person who is able to hang on to the funds or put them in a trust account until you close. If your sale falls through, your contract with the seller should specify to whom this earnest money should go.
Channel Mortgage LLC can walk you through the pitfalls of getting a mortgage. Call us at (718) 639-9500.