What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves the loan. There still remain a few major hurdles to jump before the keys are handed over. We have listed some things below you will want to avoid when waiting for your loan to close.
Don't throw your money around. Although you will be listing ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until your loan closes. You may send up red flags with your lender if you buy new electronics on your credit cards during your loan process. It's also a red flag to make those large purchases using cash. Lenders are looking at your cash reserve when considering your loan.
Don't get a new career. Lenders like to see a consistent work history on your paperwork. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, getting a new career during the approval process may affect whether or not you are approved.
Don't move cash around or change banks. Most lenders will instruct the submission of recent bank statements for accounts in your name: savings, checking, money market, and other liquid assets. Your lender looks for a steady rise and fall of your funds over the pay period, in order to avoid fraud. Changing banks or transferring funds to another account - no matter the reason - could make it harder for the lender to verify your funds.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any earnest money actually belongs to you. Your earnest funds are to go toward your expenses upon closing; a individual seller might not know this. A neutral party, like an attorney can hold your funds, or you may place them temporarily into a trust account until you close. The disposition of good faith funds, in the case of a failed transaction, should be documented in the purchase agreement with your seller.
Pacificwide Lending can answer questions about these "Don'ts" and many others. Call us: 9254610500.