Things to Avoid While Purchasing a Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until closing, your lender is watching your accounts very closely. Here are some actions to avoid during the home buying process to assure your transaction goes smoothly.
Don't overspend on big-ticket items It may be tempting to order that new couch for the soon-to-be-yours den, but it's advisable to avoid making major buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Since lenders are perusing your bank accounts, a large cash purchase is also a mistake.
Don't get a new job. Lenders like to see a consistent career history on your paperwork. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't switch banks or move money around in your accounts. Bank statements from the last few months for your accounts (savings, checking, money market, and others) will probably be studied as the lending institution makes decisions regarding your mortgage application. In order to detect fraud, lenders look for a clear and consistent picture of how you earn your money and where any additional money comes from. Even for practical purposes, moving around cash or changing banks might make it difficult for the lender to verify your account history.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your earnest money is yours, not the seller's until the sale is final. Some FSBO sellers might not know that the earnest money should be applied to your expenses at closing. It's best to put the funds into a trust account, or get a neutral person, like an attorney to hold them until closing. Your contract should document where the money goes if the home purchase fails.
At Channel Mortgage LLC, we answer questions about this process every day. Call us at (718) 639-9500.