What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Keep in mind that until closing, your lender is watching your finances very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't overspend on big-ticket items You may be tempted to buy that new easy-chair for the soon-to-be-yours living room, but it's advisable to avoid making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. It's also a bad idea to make those big purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't get a new job. Your recent work history should show stability. Getting a new job may not jeopardize 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 process could fail or be bogged down.
Don't take your accounts to a new bank or move around your cash. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other accounts) will probably be analyzed as the lender makes decisions regarding your application. To eliminate fraud, lenders require a clear and consistent picture of how you earn your money and where additional funds come from. Even for practical reasons, transferring funds or switching banks might make it harder for the lender to document your account history.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith money belongs to you, not to the seller up until the sale is final. Your seller might not know that this good faith money should be used for your expenses at closing. An attorney or other type of neutral party can hold onto your funds, or you may place them temporarily into a trust account until closing. The final disposition of good faith funds, in the case of a failed transaction, should be written in the contract with the seller.
Atlantic Financial Services can walk you through the pitfalls of getting a mortgage. Give us a call at (732) 969-9300.