What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until the keys are handed over, there still remain some hoops to jump through. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy big-ticket items. It may be tempting to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to stay away from making large purchases like furniture, appliances, jewelry, or vacations until closing. You may send up red flags with your lender if you buy your appliances on your credit cards during your loan process. Since lending institutions are looking closely at your financial accounts, a large cash purchase is also a mistake.
Don't get a new career. Your recent work history should show consistency. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, getting a new job in the middle of your application process may affect whether or not you are approved.
Don't change banks or move money around in your bank accounts. As the lending institution considers your mortgage application, you will probably be asked to produce bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate fraud, lenders need a consistent portrayal of how you earn your living and where additional money comes from. No matter the reason, switching banks or transferring money might raise a red flag with your lender and impede your approval process.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith deposit actually belongs to you. The FSBO seller may not know that any good faith money must be used for your expenses at closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until the deal closes. The disposition of earnest money, if your transaction fails, should be written in the contract with your seller.
Back Bay Funding can answer questions about these "Don'ts" and many others. Call us at (888) 299-4585.