What to Avoid During your Home Purchase
What's more fun than getting a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before closing could be trouble. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some things to stay clear of during the home buying process to assure your transaction goes smoothly.
Don't throw your money around. You may be itching to buy that new sofa for the soon-to-be-yours den, but it's advisable to avoid making major buys like furniture, appliances, jewelry, or cars until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Using cash to purchase big-ticket items can also create an issue: most lending institutions look at your available cash when approving your application.
Don't go on a job search. Lending Institutions feel comfortable seeing a consistent work history on your paperwork. Changing jobs may not compromise your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. However, getting a new job in the middle of the loan process may influence your approval.
Don't take your accounts to a new bank or move around your money. Bank statements from the last two or three months for all of your accounts (checking, savings, money market, and other accounts) will likely be studied as the lender makes decisions regarding your loan application. The lender is looking for a steady flow of your funds each pay period, in order to rule out fraud. No matter the reason, moving banks or moving funds from one account to another may raise a red flag with your lender and slow down your approval process.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") for earnest money. Until the sale is complete, any good faith deposit remains yours. Although your FSBO seller might not understand this, any earnest money must be used for your closing expenses. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until closing. The final disposition of earnest funds, if your home purchase falls through, should be specified in the purchase agreement with your seller.
The Lending Source can walk you through the pitfalls of getting a mortgage. Give us a call: (973) 601-2122.