Things to Avoid While Buying a Home
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But making big ticket purchases before closing could be trouble. There still remain a few major hurdles to jump before closing. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't make expensive purchases. You may be tempted to buy that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to stay away from making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Since lending institutions are reviewing your bank accounts, a large cash purchase is also a bad idea.
Don't get a new job. Lenders look for a consistent work history on your paperwork. Finding a new job (especially one with a better salary) may not change your ability to qualify for a mortgage. But for some people, changing careers during the mortgage loan application process might bring concern and affect your application.
Don't switch banks or move cash around in your accounts. As your lender reviews your loan package, you will probably be required to produce bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid finances. Your lender looks for a consistent rise and fall of your money over the pay period, in the interest of avoiding fraud. Even for practical purposes, moving around funds or switching banks may make it more difficult for your lender to confirm your account history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any good faith deposit remains yours. Your earnest funds are to go toward your expenses closing; a individual seller may not realize this. A neutral party, like an attorney can hang onto your funds, or you may place them temporarily into a trust account until closing. Should your home purchase fail, the contract with the seller should indicate where your good faith deposit should go.
At The Reen Team at American Pacific Mortgage, we answer questions about this process every day. Give us a call at (408) 626-1879.