Don't Trip Yourself up While Buying your 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. Until your loan closes, there are still some hoops to jump through. Here are some actions to stay clear of during the home buying process to be sure your transaction goes smoothly.
Don't throw your money around. You may be tempted to buy that new Turkish rug for the soon-to-be-yours parlor, but it's best to avoid making big ticket buys like furniture, appliances, electronic equipment, or cars until closing. Your lender may send up red flags if you finance your electronics on your credit cards during your loan process. It's also a mistake to make those large purchases using cash. Lenders are examining your cash on hand when considering your loan.
Don't get a new career. Stability in your work history is a good thing to lending institutions. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are improving your salary. However, finding a new job in the middle of the application process could influence whether or not you are approved.
Don't move finances around or switch banks. Your lending institution will instruct the submission of recent bank statements for all of your accounts: checking, savings, money market, and other liquid assets. To detect potential fraud, most loans require a detailed paper trail to document the source of all incoming funds. Even for practical purposes, transferring funds or switching banks could make it harder for the lender to verify your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until the completion of the deal, the good faith money remains yours. Although your FSBO seller may not realize this, your good faith funds must be applied to your closing expenses. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the deal closes. The disposition of good faith funds, in the case of a failed transaction, should be written in the contract with your seller.
Atlantic Financial Services can answer questions about these "Don'ts" and many others. Call us at (732) 969-9300.