What to Avoid During your Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves the loan. Until the keys are handed over, there still remain some hoops to jump through. We have listed some things below you will want to avoid when waiting for closing.
Don't throw your money around. Although you may be listing ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until your loan closes. Using plastic to buy furniture could jeopardize your loan process by altering your numbers dramatically. It's also a red flag to make those huge purchases using cash. Lenders are examining your cash on hand when considering your loan.
Don't go on a job search. Stability in your job history is a good thing to lenders. Finding a new job (particularly one with a better paycheck) may not hinder your ability to qualify for your loan. However, switching jobs in the middle of the loan process could influence your approval.
Don't move finances around or switch banks. Your lender will require you to submit recent bank statements for your accounts: savings, checking, money market, and other assets. To eliminate potential fraud, most lenders want a thorough paper trail to document the source of all funds. Switching banks or transferring funds to another account - no matter the reason - could make it difficult for the lender to verify your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller until closing. Although some individual sellers might not know this, the good faith funds should go toward the buyer's closing expenses. Find a lawyer or other neutral party who is able to hold the deposit or put it in a trust account until closing. If your sale falls through, your purchase agreement should document where this earnest money should go.
At Atlantic Financial Services, we answer questions about this process every day. Call us at (732) 969-9300.