Things to Avoid While Purchasing a Home
What's more fun than buying a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before closing can be a misstep. Keep in mind that until closing, your lender is watching you very closely. We have listed some actions below we suggest you stay away from when waiting for your loan to close.
Don't buy big-ticket items. It may be tempting to order that new couch for the soon-to-be-yours parlor, but it's best to stay away from making big ticket purchases like furniture, appliances, electronic equipment, or cars until closing. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Using cash to buy big items can also be a problem: most lending institutions take into consideration your cash reserve when approving your mortgage.
Don't get a new career. Stability in your career history is a good thing to lending institutions. Finding a new career (particularly one with a better paycheck) may not hinder your ability to qualify for your loan. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't move cash around or switch banks. Your lending institution will ask for recent bank statements of your accounts: savings, checking, money market, and other assets. Your lending institution will need to see a steady flow of your money each month, in the interest of ruling out fraud. Even for innocent purposes, moving around finances or switching banks may make it difficult for the lender to document your bank history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's until the deal closes. Your good faith funds are to be applied to your expenses closing; some sellers may not know this. Find a lawyer or other neutral person who can hang on to the money or place it in a trust account until closing. Should your home purchase fail, the purchase agreement should specify where your earnest money should go.
At Channel Mortgage LLC, we answer questions about this process every day. Call us at (718) 639-9500.