Things to Avoid While Buying a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before your loan closes. We have listed some things below you will want to avoid when waiting for closing.
Don't buy big-ticket items. It may be tempting to buy that new easy-chair for the soon-to-be-yours living room, but it's advisable to avoid making major purchases like furniture, appliances, jewelry, or vacations until closing. Using credit cards to buy new living room furniture could compromise your loan process by altering your numbers dramatically. Because lenders are perusing your bank accounts, a large cash purchase is also not advised.
Don't get a new job. Lending Institutions feel comfortable seeing a consistent career history on your paperwork. Changing jobs may not affect your ability to qualify for a loan - especially if you are getting a bigger paycheck. But for some people, getting a new career during the mortgage loan application process might bring concern and hinder your approval.
Don't move money around or switch banks. Your lending institution will require you to provide recent bank statements for your accounts: savings, checking, money market, and other liquid assets. In order to avoid fraud, lenders look for a consistent portrayal of how you earn your living and where any additional money comes from. No matter the purpose, changing banks or moving funds from one account to another might raise a red flag with the lender and impede your qualification process.
Don't give money directly to your seller (usually in cases of "for sale by owner") to be used as earnest money. Your good faith money does not belong to the seller: it remains yours until the sale closes. Although your seller might not realize this, your good faith funds should be used for your closing expenses. You'll want to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until closing. The disposition of earnest funds, in the case of a failed transaction, should be written in the purchase agreement with the seller.
The Reen Team at American Pacific Mortgage can answer questions about these "Don'ts" and many others. Call us at (408) 626-1879.