What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Keep in mind that until closing, your lender is watching your finances very closely. Here are some actions to refrain from before closing to be sure your transaction goes smoothly.
Don't throw your money around. Although you will be listing ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. It's also a mistake to make those large purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't get a new career. Your recent job history should show consistency. Getting a new career before you apply for a mortgage may not jeopardize your approval at all. However, getting a new job in the middle of your application process could influence your approval.
Don't switch your accounts to a new bank or move around your money. Bank statements from recent months for your accounts (savings, checking, money market, and others) will likely be reviewed as the lender makes decisions regarding your loan application. The lender looks for a steady rise and fall of your funds each pay period, in order to avoid fraud. Changing banks or moving finances to another account - for whatever reason - may make it harder for the lender to review your funds.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until closing, any good faith money remains yours. The good faith funds are to go toward your expenses closing; some FSBO sellers may not realize this. It's wise to put the money into a trust account, or get a neutral party, like an attorney, to hold it until closing. The disposition of good faith money, in the case of a failed transaction, should be documented in the contract with your seller.
At Back Bay Funding, we answer questions about this process every day. Call us at (888) 299-4585.