Things to Avoid While Purchasing a Home
What's more fun than buying a bunch of new stuff to go in your future home? Not much. But buying big ticket items before closing could be trouble. Until the house is really yours, there are still some hurdles to jump. We have listed some actions below we suggest you stay away from when waiting for your loan to close.
Don't buy luxury items. Although you will be dreaming of ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you keep away from vacations and car purchases until your loan closes. Your lender may send up red flags if you purchase new appliances on your credit cards in the middle of your loan process. It's also a bad idea to make those huge purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a career search. Lenders look for a consistent career history on your application. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are improving your salary. However, if you switch careers before approval, your process could fail or be bogged down.
Don't move finances around or switch banks. Bank statements from the last two or three months for your accounts (savings, checking, money market, and other accounts) will probably be analyzed as the lender makes decisions regarding your loan application. To eliminate fraud, lenders will need a clear and consistent picture of how you earn your living and where additional funds come from. Changing banks or moving funds to another account - no matter the purpose - could make it harder for the lender to verify your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until the sale is complete, any good faith money actually belongs to you. Some FSBO sellers might not realize that any good faith money is to be applied to your expenses upon closing. An attorney or other type of neutral party can hold your earnest funds, or you may put them temporarily into a trust account until closing. Your contract should document who keeps the deposit if the home purchase fails.
The Reen Team at American Pacific Mortgage can answer questions about these "Don'ts" and many others. Call us: (408) 626-1879.