What to Avoid During your Home Purchase
What's more fun than getting a bunch of new furniture to go in your future home? Not much. But buying big ticket items before your loan closes could be trouble. Keep in mind that until you get the keys, your lender is watching you very closely. Here are some actions to stay clear of during the home buying process to be sure your transaction goes well.
Don't throw your money around. It may be tempting to buy that new Turkish rug for the soon-to-be-yours parlor, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's also a red flag to make those huge purchases using cash. Lending Institutions are looking at your available cash when considering your loan.
Don't get a new career. Stability in your job history is a positive thing to lending institutions. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. But in some cases, changing careers during the mortgage loan application process could raise concern and stymie your approval.
Don't switch your accounts to a new bank or move around your money. As the lending institution reviews your mortgage application, you will likely be instructed to produce bank statements for the last few months for your saving and checking accounts, money market funds and other liquid finances. The lending institution will need to see a consistent flow of your money each pay period, in the interest of ruling out fraud. No matter the purpose, moving banks or transferring funds could raise a red flag with your lender and impede your approval process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller may not understand this, any good faith money must go toward your closing expenses. Get a lawyer or other neutral person who will hold the funds or put them in a trust account until closing. Should your home purchase fail, the purchase agreement should dictate to whom the good faith deposit should go.
Omni Mortgage Corp. can walk you through the pitfalls of getting a mortgage. Give us a call: 718-441-7000.