What to Avoid During a Home Purchase
What's more fun than getting a bunch of new furnishings to adorn your future home? Not much. But making big ticket purchases before closing could be trouble. Until your keys are in hand, there still remain some hoops to jump through. We have given you a list of actions below you will want to avoid when waiting for your loan to close.
Don't throw your money around. You may be tempted to order that new couch for the soon-to-be-yours den, but it's best to stay away from making major buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Using credit cards to buy new living room furniture could compromise your loan process by distorting your numbers. Using cash to purchase big-ticket items can also create a mistake: most banks take into consideration your cash reserve when approving your mortgage loan.
Don't get a new job. Consistency in your job history is a positive thing to lending institutions. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. But for some, changing jobs during the mortgage application process might bring concern and hinder your application.
Don't move money around or switch banks. Most lenders will instruct the submission of recent bank statements for all of your accounts: savings, checking, money market, and other liquid assets. Your lending institution wants to see a steady flow of your funds over the pay period, in order to rule out fraud. Even for innocent reasons, transferring cash or changing banks could make it more difficult for the lending institution to confirm your bank history.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be considered earnest money. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Some sellers might not know that this earnest money is to be used for your expenses upon closing. Get an attorney or other neutral person who can hang on to the money or place it in a trust account until you close. The disposition of good faith funds, if your home purchase fails, should be specified in the purchase agreement with your seller.
Omni Mortgage Corp. can walk you through the pitfalls of getting a mortgage. Give us a call: 718-441-7000.