Things to Avoid While Purchasing a Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before your loan closes. We have given you a list of things below we suggest you avoid when waiting for closing.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy new living room furniture could compromise your lending process by distorting your numbers. Because lenders are examining your financial accounts, a large cash purchase is also a bad idea.
Don't look for a new job. Your recent work history should show stability. Finding a new career (especially one with a better salary) may not change your ability to qualify for a mortgage. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't take your accounts to a new bank or move around your finances. Most lenders will ask for recent bank statements on all of your accounts: savings, checking, money market, and other liquid assets. To eliminate potential fraud, most loans need a thorough paper trail to verify the source of all incoming funds. Even for innocent reasons, transferring cash or changing banks may make it harder for your lending institution to document your account history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Your FSBO seller may not know that any good faith funds should be used for your expenses upon closing. Get a lawyer or other neutral party who is able to hang on to the funds or place them in a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be included in the purchase agreement with the seller.
Back Bay Funding can walk you through the pitfalls of getting a mortgage. Give us a call: (800) 299-0270.