Things to Avoid While Purchasing a Home
With the thrill 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 appliance store. Keep in mind that until closing, your lender is watching you very closely. We have listed some things below you will want to stay away from when waiting for your loan to close.
Don't overspend on big-ticket items Although you will be dreaming of 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 stay away from vacations and vehicle purchases until your loan closes. Using plastic to buy new living room furniture could compromise your loan process by changing your numbers dramatically. Since lenders are perusing your financial accounts, a large cash purchase is also not advised.
Don't go on a job search. Lending Institutions feel comfortable seeing a consistent work history on your application forms. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't change banks or move cash around in your accounts. As your lender considers your mortgage loan package, you will probably be instructed to provide bank statements for the last few months on your checking accounts, savings accounts, money market accounts and other liquid finances. To detect fraud, lenders need a consistent portrayal of how you earn your living and where additional wealth comes from. Even for innocent purposes, moving around funds or changing banks may make it harder for your lending institution to document your account history.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") for earnest money. Until the completion of the deal, any good faith deposit actually belongs to you. Any good faith money is to be applied to your expenses closing; some sellers might not know this. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until closing. The purchase contract should document who gets the money if the transaction does not go through.
Atlantic Financial Services can answer questions about these "Don'ts" and many others. Call us: (732) 969-9300.