Don't Trip Yourself up While Buying your Home
What's more fun than buying a bunch of new furniture to adorn your future home? Nothing. But making large purchases before your loan closes can be a misstep. Until closing, there are still some hoops to jump through. We have listed some actions below you will want to avoid when waiting for your loan to close.
Don't buy luxury items. Although you will be dreaming of ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until the closing of your loan. You may send up red flags with your lender if you purchase your appliances on your credit cards in the middle of your loan process. Because lending institutions are perusing your financial accounts, a large cash purchase is also a mistake.
Don't look for a new career. Your recent job history should show stability. Getting a new job before you apply for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before approval, your mortgage process could fail or be slowed down.
Don't take your accounts to a new bank or move around your money. While your lender reviews your mortgage loan package, you will probably be instructed to produce bank statements for recent months for your saving and checking accounts, money market accounts and other liquid finances. To eliminate fraud, lenders look for a clear and consistent picture of how you earn your money and where any additional funds come from. No matter the reason, switching banks or transferring funds could raise a red flag with your lender and slow your qualification process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your earnest money does not belong to the seller: it remains yours until the sale closes. Although your seller might not realize this, your good faith money should be applied to the buyer's closing expenses. Get a lawyer or other neutral party who can hold the money or put it in a trust account until closing. The purchase contract should dictate who gets the money if the home purchase falls through.
The Reen Team at American Pacific Mortgage can answer questions about these "Don'ts" and many others. Give us a call: (408) 626-1879.