Things to Avoid While Purchasing a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until your loan closes. You may send up red flags with your lender if you purchase your appliances on your credit cards in the middle of your loan process. Because lending institutions are examining your bank accounts, a large cash purchase is also a mistake.
Don't go on a job search. Lenders look for a consistent work history on your application. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a bigger paycheck. But in some cases, getting a new job during the mortgage loan approval process might raise concern and affect your application.
Don't take your accounts to a new bank or move around your money. While the lender reviews your mortgage application, you will probably be instructed to submit bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid wealth. To detect potential fraud, most loans require detailed paperwork to document the source of all funds. No matter the reason, moving banks or transferring funds may raise a red flag with your lender and slow your qualification process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Your earnest funds are to be applied to your expenses closing; some sellers might not realize this. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until closing. If your sale falls through, your contract with the seller should document to whom your good faith deposit should go.
At Omni Mortgage Corp., we answer questions about this process every day. Give us a call at 718-441-7000.