Don't Trip Yourself up While Buying your Home
What's better than getting a bunch of new stuff to adorn your future home? Not much. But making big ticket purchases before your loan closes can be a misstep. Until your keys are in hand, there still remain some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't buy luxury items. You may be tempted to order that new Turkish rug for the soon-to-be-yours living room, but it's advisable to avoid making major buys like furniture, appliances, jewelry, or vacations until closing. Using credit cards to buy furniture could compromise your lending process by altering your numbers dramatically. Because lenders are examining your bank accounts, a large cash purchase is also not advised.
Don't go on a career search. Consistency in your work history is a positive thing to lending institutions. Finding a new career (particularly one with a better salary) may not hinder your ability to qualify for your mortgage. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't move cash around or switch banks. While your lender reviews your mortgage package, you will likely be required to provide bank statements for recent months on your checking and savings accounts, money market accounts and other liquid assets. To avoid fraud, lenders require a consistent portrayal of how you earn your living and where additional wealth comes from. Even for practical reasons, moving around cash or switching banks might make it difficult for the lender to verify your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith deposit is yours, not the seller's until closing. Your seller might not realize that any good faith money is to go toward your expenses upon closing. You'll need to put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. If your sale falls through, your purchase contract should indicate where your good faith funds should go.
The Reen Team at American Pacific Mortgage can answer questions about these "Don'ts" and many others. Call us: (408) 626-1879.