What to Avoid During your Home Purchase
What's more fun than buying a bunch of new furniture to go in your future home? Not much. But making big purchases before your loan closes can be a mistake. There still remain a few major hurdles to jump before the house is realy yours. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't buy luxury items. Although you may be planning ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. 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. It's even a red flag to make those large purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a career search. Stability in your work history is a good thing to lenders. Getting a new career before you start the application process for a mortgage may not affect your approval at all. However, switching jobs during your application process might influence whether or not you are approved.
Don't move finances around or change banks. Your lending institution will instruct the submission of recent bank statements of your accounts: savings, checking, money market, and other liquid assets. In order to detect fraud, lenders require a consistent portrayal of how you earn your living and where additional wealth comes from. No matter the purpose, moving banks or transferring funds may raise a red flag with the lender and slow your qualification process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your earnest money is yours, not the seller's up until closing. Although some individual sellers might not realize this, the good faith money should be applied to the buyer's closing expenses. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. Your purchase contract should dictate who gets the money if the home purchase does not go through.
At Pacificwide Lending, we answer questions about this process every day. Give us a call: 9254610500.