Things to Avoid While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves the loan. Until the keys are handed over, there are still some hurdles to jump. We have given you a list of things below you will want to stay away from when waiting for your loan to close.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a red flag to make those huge purchases using cash. Lenders are examining your available cash when considering your loan.
Don't go on a career search. Your recent job history should show consistency. Finding a new job (particularly one with a better paycheck) may not affect your ability to qualify for a mortgage loan. But in some cases, switching jobs during the mortgage application process may raise concern and stymie your approval.
Don't switch your accounts to a new bank or move around your money. While your lender reviews your loan application, you will probably be asked to submit bank statements for the last two or three months for your saving and checking accounts, money market funds and other liquid assets. In order to detect fraud, lenders look for clear documentation of how you earn your living and where additional money comes from. No matter the purpose, moving banks or moving money from one account to another could raise a red flag with your lender and slow your application process.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. Until the sale is complete, the good faith deposit remains yours. Although your FSBO seller may not realize this, your good faith money must be used for your closing expenses. Get an attorney or other neutral person who is able to hold the funds or put them in a trust account until closing. The disposition of earnest money, in the case of a failed transaction, should be included in the contract with the seller.
The Reen Team at American Pacific Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: (408) 626-1879.