Things to Avoid While Purchasing a Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. It's wise to remember that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't make expensive purchases. It may be tempting to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making large purchases like furniture, appliances, jewelry, or cars until closing. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to buy big-ticket items can also be a problem: most banks take into consideration your cash on hand when approving your loan.
Don't go on a job search. Your recent career history should show consistency. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, switching careers during your application process may affect your approval.
Don't move finances around or switch banks. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other accounts) will probably be analyzed as the lender considers your application. In order to detect fraud, lenders will need a clear and consistent picture of how you earn your money and where any additional money comes from. Even for innocent reasons, moving around cash or changing banks might make it more difficult for the lender to confirm your account history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it is actually yours until closing. The FSBO seller might not know that these good faith funds must go toward your expenses upon closing. It's wise to put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. Should your home purchase fail, the purchase contract should specify 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 at (408) 626-1879.