Things to Avoid While Purchasing a New Home
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before closing can be an error. It's best to remember that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't throw your money around. Although you may be dreaming of ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and car purchases until the closing of your loan. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to purchase big items can even create a mistake: many lenders look at your cash reserve when approving your mortgage.
Don't go on a job search. Consistency in your career history is a positive thing to banks and other lenders. Finding a new job (particularly one with a bigger salary) may not affect your ability to qualify for your mortgage. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't switch banks or move money around in your accounts. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will probably be reviewed as the lender considers your approval. To avoid potential fraud, most loans require a thorough paper trail to document the source of all incoming funds. Even for innocent reasons, transferring cash or switching banks could make it harder for the lender to document your account history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until closing. Your earnest funds are to go toward your expenses closing; some sellers might not realize this. A neutral party, like an attorney can hold onto your funds, or you may place them temporarily into a trust account until you close. If your home purchase fails, your purchase contract should dictate to whom this earnest money should go.
At Omni Mortgage Corp., we answer questions about this process every day. Call us at 718-441-7000.