What to Avoid During a 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 loan is approved. Keep in mind that until your keys are in hand, your lender is watching you very closely. Here are some things to stay clear of before closing to assure your transaction goes well.
Don't empty your wallet on big-ticket items Although you may be dreaming of ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Using cash to buy big items can also be a problem: many lenders take into consideration your cash on hand when approving your application.
Don't look for a new career. Your recent work history should show stability. Finding a new job (especially one with a bigger salary) may not affect your ability to qualify for your loan. However, getting a new career in the middle of the loan process might affect your approval.
Don't switch banks or move cash around in your bank accounts. Your lender will ask for recent bank statements on your accounts: checking, savings, money market, and other liquid assets. To avoid fraud, lenders look for a consistent portrayal of how you earn your living and where additional money comes from. No matter the purpose, switching banks or moving funds from one account to another could raise a red flag with your lender and impede your application process.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered earnest money. Until closing, any good faith deposit remains yours. The good faith funds are to be applied to your expenses closing; some individual sellers might not know this. Find an attorney or other neutral party who can hold the funds or place them in a trust account until you close. Should your sale fall through, the purchase contract should indicate to whom this earnest money should go.
Atlantic Financial Services can answer questions about these "Don'ts" and many others. Give us a call: (732) 969-9300.