Things to Avoid While Buying a New Home
What's better than buying a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before closing could be trouble. Until the house is really yours, there still remain some hoops to jump through. We have given you a list of things below you will want to stay away from when waiting for your loan to close.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you purchase your appliances on your credit cards during your loan process. Using cash to buy expensive items can even be a problem: most lending institutions consider your available cash when approving your application.
Don't look for a new job. Stability in your work history is a positive thing to banks and other lenders. Getting a new job may not compromise your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, finding a new job in the middle of your approval process could affect your approval.
Don't switch banks or move money around in your bank accounts. Most lenders will require you to provide recent bank statements for all of your accounts: checking, savings, money market, and other assets. The lender is looking for a consistent flow of your money each pay period, in the interest of ruling out fraud. No matter the purpose, moving banks or moving funds from one account to another may raise a red flag with your lender and slow down your application process.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") to be used as earnest money. As a rule, your earnest money belongs to you, not the seller until the deal closes. The FSBO seller might not know that your good faith funds should be applied to your expenses at closing. It's wise to put the funds into a trust account, or get an attorney to hold them until the deal closes. Your purchase contract should specify where the funds go if the home purchase falls through.
At Omni Mortgage Corp., we answer questions about this process every day. Call us: 718-441-7000.