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 taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before closing. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't make expensive purchases. Although you may be listing ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and car purchases until your loan closes. You may send up red flags with your lender if you purchase your appliances on your credit cards in the middle of your loan process. Since lending institutions are perusing your bank accounts, a large cash purchase is also not advised.
Don't get a new career. Your recent job history should show consistency. Getting a new job before you start the application process for a mortgage may not get in the way of your approval at all. However, if you switch careers before your loan is approved, your loan process could fail or be bogged down.
Don't switch banks or move finances around in your accounts. Your lending institution will instruct the submission of recent bank statements on your accounts: checking, savings, money market, and other assets. To eliminate potential fraud, most lenders require a detailed paper trail to determine the source of all incoming funds. No matter the purpose, moving banks or transferring funds might raise a red flag with your lender and slow your loan process.
Don't give money directly to your seller (generally in the case of of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it is actually yours until closing. Some FSBO sellers may not know that the good faith money should be used for your expenses at closing. Find a lawyer or other neutral party who can hang on to the money or put it in a trust account until closing. The final disposition of good faith money, in the case of a failed transaction, should be documented in the purchase agreement with your seller.
Channel Mortgage LLC can walk you through the pitfalls of getting a mortgage. Give us a call: (718) 639-9500.