What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves their loan. Keep in mind that until you get the keys, 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 buy big-ticket items. Although you will be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. It's even a red flag to make those large purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't go on a job search. Lenders like to see a consistent work history on your application forms. Finding a new career (particularly one with a bigger salary) may not change your ability to qualify for a mortgage. However, switching careers in the middle of your approval process may influence your approval.
Don't move cash around or change banks. Bank statements from recent months for your accounts (checking, savings, money market, and other assets) will probably be studied as the lending institution considers your application. Your lender looks for a steady flow of your funds over the pay period, in order to avoid fraud. Even for innocent purposes, moving around funds or changing banks might make it difficult for the lending institution to verify your account history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it remains yours until the transaction is final. Your FSBO seller may not realize that any good faith funds must be applied to your expenses at closing. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The disposition of earnest funds, in the case of a failed transaction, should be indicated in the contract with your seller.
At Omni Mortgage Corp., we answer questions about this process every day. Call us at 718-441-7000.