Things to Avoid While Purchasing a New Home
What's better than buying a bunch of new stuff to adorn your future home? Not much. But making big purchases before closing can be harmful. It's best to remember that until you get the keys, your lender is watching your accounts very closely. Here are some things to stay clear of during the home buying process to be sure the transaction goes well.
Don't empty your wallet on big-ticket items Although you will be planning ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until the closing of your loan. You may send up red flags with your lender if you finance your appliances on your credit cards in the middle of your loan process. Since lenders are examining your bank accounts, a large cash purchase is also a mistake.
Don't go on a job search. Your recent job history should show consistency. Getting a new job may not compromise your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, if you switch careers before your loan is approved, your mortgage process could fail or be slowed down.
Don't move cash around or switch banks. Your lender will require you to produce recent bank statements on accounts in your name: checking, savings, money market, and other assets. The lending institution looks for a steady rise and fall of your money each month, in order to rule out fraud. No matter the purpose, changing banks or transferring money could raise a red flag with the lender and slow your application process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit belongs to you, not the seller until the sale is final. Although some FSBO sellers might not know this, the good faith money should go toward the buyer's closing expenses. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until you close. The disposition of earnest money, if your sale falls through, should be documented in the purchase agreement with your seller.
Atlantic Financial Services can answer questions about these "Don'ts" and many others. Call us: (732) 969-9300.