With the thrill that comes with an accepted offer and a “yes” from the lender, many homebuyers make the error of taking their excitement straight to the mall or appliance store. Until closing, there are still some hoops to jump through. We have listed some things below you will want to stay away from when waiting for closing.
Don’t make expensive purchases. You may be itching to order that new couch for the soon-to-be-yours living room, but it’s best to stay away from making big ticket buys like furniture, appliances, jewelry, or vacations until closing. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It’s also a mistake to make those big-ticket purchases using cash. Lenders are looking at your cash reserve when considering your loan.
Don’t get a new job. Your recent job history should show stability. Getting a new job before you start the application process for a mortgage loan may not compromise your approval at all. However, finding a new career during your approval process might influence whether or not you are approved.
Don’t move money around or change banks. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will probably be analyzed as the lending institution makes decisions regarding your loan application. In order to avoid fraud, lenders require a clear and consistent picture of how you earn your money and where additional funds come from. No matter the purpose, changing banks or transferring money may raise a red flag with your lender and slow your application process.
Don’t deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith deposit actually belongs to you. Any good faith funds are to be applied to your expenses upon closing; some sellers may not realize this. You’ll want to put the money into a trust account, or get a neutral party, like an attorney, to hold it until the deal closes. The disposition of earnest funds, in the case of a failed transaction, should be documented in the purchase agreement with the seller.