Things to Avoid While Purchasing 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 carrying their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before closing. We have given you a list of actions below you will want to stay away from when waiting for closing.
Don't make expensive purchases. Although you will be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. It's even a mistake to make those large purchases using cash. Lenders are examining your cash reserve when considering your loan.
Don't go on a job search. Lenders look for a consistent career history on your application forms. Finding a new career (especially one with a better salary) may not change your ability to qualify for a mortgage. But for some people, changing jobs during the mortgage application process might raise concern and affect your application.
Don't switch your accounts to a new bank or move around your finances. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will be reviewed as the lending institution makes decisions regarding your approval. To eliminate potential fraud, most lenders require thorough paperwork to document the source of all incoming funds. Even for practical reasons, transferring finances or switching banks may make it more difficult for the lending institution to confirm your account history.
Don't give cash directly to your seller (commonly in the case of of "for sale by owner") for a "good faith" deposit. Until the completion of the deal, any good faith deposit actually belongs to you. Your seller may not know that the earnest money is to go toward your expenses upon closing. An attorney or other type of neutral party can hold onto your funds, or you may place them temporarily into a trust account until closing. Should your sale fall through, the purchase contract should dictate to whom this good faith deposit should go.
At Abbey Mortgage, we answer questions about this process every day. Call us at 352-369-4200.