What to Avoid During a 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. Until closing, there are still some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't buy luxury items. It may be tempting to order that new sofa for the soon-to-be-yours den, but it's advisable to stay away from making large purchases like furniture, appliances, jewelry, or cars until your home loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Since lending institutions are examining your bank accounts, a large cash purchase is also a mistake.
Don't get a new job. Your recent career history should show stability. Getting a new job before you start the application process for a mortgage loan may not jeopardize your approval at all. However, switching jobs in the middle of your application process may affect your approval.
Don't change banks or move finances around in your bank accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will likely be reviewed as the lending institution considers your application. To avoid potential fraud, most loans need detailed paperwork to document the source of all funds. Changing banks or transferring money elsewhere - even if its merely to pool funds - could hinder the review of your accounts.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the earnest money remains yours. Your seller may not know that this good faith money should be used for your expenses upon closing. Get a lawyer or other neutral party who will hang on to the funds or place them in a trust account until you close. Your contract should specify who gets the earnest funds if the home purchase falls through.
Chris Caggiano - Grand Oaks Funding, LLC can answer questions about these "Don'ts" and many others. Call us: (718) 477-4405.