Things to Avoid While Buying a New Home
In the rush of excitement 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 furniture store. It's wise to remember that until closing, your lender is watching your finances very closely. We have given you a list of actions below you will want to avoid when waiting for your loan to close.
Don't empty your wallet on big-ticket items You may be tempted to buy that new couch for the soon-to-be-yours living room, but it's advisable to stay away from making big ticket purchases like furniture, appliances, jewelry, or cars until your home loan closes. Using plastic to buy furniture could jeopardize your loan process by distorting your numbers. Since lending institutions are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't get a new job. Lending Institutions feel comfortable seeing a consistent work history on your application forms. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. However, switching careers in the middle of the application process may affect whether or not you are approved.
Don't switch banks or move money around in your accounts. Bank statements from recent months for accounts in your name (savings, checking, money market, and other accounts) will be reviewed as the lending institution considers your loan application. The lender will need to see a consistent flow of your money each pay period, in the interest of avoiding fraud. No matter the purpose, changing banks or transferring funds may raise a red flag with your lender and slow down your application process.
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 earnest funds are to go toward your expenses closing; some FSBO sellers may not understand this. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the deal closes. Should your sale fall through, the purchase agreement should dictate where the good faith funds should go.
At Back Bay Funding, we answer questions about this process every day. Give us a call: (888) 299-4585.