Things to Avoid While Purchasing a Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves the loan. Keep in mind that until you get the keys, your lender is watching your accounts very closely. 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 will be dreaming of ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Your lender may send up red flags if you finance your furniture on your credit cards in the middle of your loan process. It's even a red flag to make those large purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't look for a new job. Stability in your career history is a good thing to lenders. Finding a new job (particularly one with a better salary) may not affect your ability to qualify for your mortgage loan. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't move money around or switch banks. As the lender considers your mortgage loan package, you will likely be required to submit bank statements for the last few months for your saving and checking accounts, money market funds and other liquid wealth. To eliminate potential fraud, most lenders need detailed paperwork to determine the source of all cash. Changing banks or moving money elsewhere - even if its just to consolidate funds - might make it difficult for your lender to document your funds.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your earnest money is yours, not the seller's up until the sale is final. The good faith money is to go toward your expenses upon closing; the FSBO seller may not know this. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. The final disposition of good faith money, in the case of a failed transaction, should be included in the contract with your seller.
Channel Mortgage LLC can answer questions about these "Don'ts" and many others. Call us: (718) 639-9500.