What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before your loan closes. We have given you a list of things below you will want to stay away from when waiting for closing.
Don't buy luxury items. You may be itching to buy that new couch for the soon-to-be-yours living room, but it's best to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lenders are examining your bank accounts, a large cash purchase is also not advised.
Don't get a new job. Your recent job history should show consistency. Getting a new career before you apply for a mortgage loan may not affect your approval at all. But for some people, switching jobs during the loan approval process could bring concern and hinder your approval.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for all of your accounts (savings, checking, money market, and others) will likely be reviewed as the lending institution makes decisions regarding your mortgage application. The lender is looking for a consistent rise and fall of your funds each pay period, in order to avoid fraud. No matter the reason, moving banks or moving money from one account to another might raise a red flag with the lender and slow down your application process.
Don't hand over 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 the sale closes. Although some FSBO sellers may not realize this, any good faith money must be used for the buyer's closing expenses. You'll need to put the money into a trust account, or get an attorney to hold it until the deal closes. The final disposition of earnest money, if your transaction fails, should be specified in the purchase agreement with the seller.
Omni Mortgage Corp. can walk you through the pitfalls of getting a mortgage. Give us a call at 718-441-7000.