Dont's When Purchasing a House
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Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Here are some things to refrain from during the home buying process to be sure the transaction goes well.
Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Using plastic to buy new living room furniture could compromise your lending process by distorting your numbers. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Your recent job history should show stability. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, if you switch careers before approval, your process could fail or be stalled.
Don't switch banks or move money around in your bank accounts. Your lender will instruct the submission of recent bank statements on your accounts: savings, checking, money market, and other liquid assets. Your lender looks for a steady rise and fall of your money over the month, in order to avoid fraud. No matter the purpose, changing banks or moving money from one account to another may raise a red flag with your lender and slow down your application process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith money actually belongs to you. Some FSBO sellers may not realize that any good faith funds must go toward your expenses upon closing. Get an attorney or other neutral party who can hold the money or place it in a trust account until closing. The disposition of earnest funds, if your home purchase falls through, should be specified in the contract with your seller.
Pacificwide Lending can walk you through the pitfalls of getting a mortgage. Call us: 925-461-0500.