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 error of taking their enthusiasm straight to the mall or furniture store. Until your loan closes, there are still some hurdles to jump. We have given you a list of actions below we suggest you avoid when waiting for closing.
Don't overspend on big-ticket items It may be tempting to order that new easy-chair for the soon-to-be-yours den, but it's advisable to avoid making big ticket buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Using plastic to buy furniture could jeopardize your lending process by altering your numbers dramatically. Using cash to buy expensive items can also create an issue: many banks look at your available cash when approving your loan.
Don't get a new career. Lenders like to see a consistent work history on your application. Getting a new job before you apply for a loan may not affect your approval at all. But for some people, changing careers during the mortgage approval process may raise concern and affect your approval.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for all of your accounts (savings, checking, money market, and others) will likely be studied as the lender makes decisions regarding your application. Your lending institution looks for a steady rise and fall of your money over the month, in the interest of avoiding fraud. No matter the purpose, moving banks or moving money from one account to another might raise a red flag with the lender and slow your approval process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until closing. Some sellers may not realize that any good faith funds is to be used for your expenses at closing. You'll want to put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. If your home purchase fails, the contract with the seller should document where the earnest money should go.
At Atlantic Financial Services, we answer questions about this process every day. Give us a call: (732) 969-9300.