What to Avoid During your Home Purchase
What's better than buying a bunch of new stuff to adorn your future home? Nothing. But making large purchases before your loan closes could be trouble. It's best to remember that until your keys are in hand, your lender is watching your accounts very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Since lending institutions are examining your financial accounts, a large cash purchase is also a mistake.
Don't go on a job search. Stability in your career history is a good thing to lenders. Getting a new job before you apply for a loan may not affect your approval at all. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't switch your accounts to a new bank or move around your finances. As the lender reviews your mortgage loan application, you will probably be asked to provide bank statements for the last few months on your saving and checking accounts, money market funds and other liquid finances. Your lending institution hopes to see a consistent rise and fall of your money each pay period, in the interest of ruling out fraud. Even for practical reasons, transferring funds or changing banks could make it more difficult for your lending institution to document your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until the sale is complete, any good faith deposit actually belongs to you. A FSBO seller might not know that your good faith money must be applied to your expenses upon closing. A neutral party, like an attorney can hold your earnest money, or you may put it temporarily into a trust account until you close. Should your home purchase fail, your contract with the seller should indicate to whom your good faith deposit should go.
The Lending Source can walk you through the pitfalls of getting a mortgage. Give us a call at (973) 601-2122.