Don't Trip Yourself up While Buying a New Home

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until you get the keys, your lender is watching your accounts very closely. We have given you a list of things below you will want to stay away from when waiting for closing.

Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you finance your furniture on your credit cards during your loan process. Using cash to purchase expensive items can even create a bad idea: many lenders take into consideration your available cash when approving your mortgage.

Don't go on a job search. Stability in your career history is a positive thing to lending institutions. Getting a new career before you apply for a mortgage loan may not compromise your approval at all. But for some people, getting a new career during the mortgage loan approval process could bring concern and stymie your application.

Don't move cash around or switch banks. Bank statements from recent months for your accounts (savings, checking, money market, and other assets) will probably be analyzed as the lending institution makes decisions regarding your loan application. To avoid fraud, lenders need a consistent portrayal of how you earn your living and where additional funds come from. Even for innocent purposes, transferring funds or switching banks may make it more difficult for your lender to verify your bank history.

Don't hand over a "good faith" deposit 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 the sale closes. Although some individual sellers may not know this, any earnest money must be applied to your closing expenses. An attorney or other type of neutral party can hang onto your earnest funds, or you may put them temporarily into a trust account until closing. The contract should dictate who gets the deposit if the transaction fails.

Channel Mortgage LLC can answer questions about these "Don'ts" and many others. Give us a call: (718) 639-9500.

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