What to Avoid During a Home Purchase
What's better than getting a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before closing can be a misstep. It's best to remember that until your keys are in hand, your lender is watching you very closely. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.
Don't empty your wallet on big-ticket items You may be itching to order that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making big ticket buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your lender may send up red flags if you purchase your furniture on your credit cards during your loan process. Using cash to purchase big items can even create a bad idea: most lenders look at your cash on hand when approving your mortgage loan.
Don't get a new career. Your recent career history should show consistency. Getting a new career before you apply for a loan may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your process could fail or be slowed down.
Don't move money around or switch banks. As your lender reviews your loan application, you will likely be instructed to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market accounts and other liquid finances. To eliminate fraud, lenders require clear documentation of how you earn your living and where additional money comes from. No matter the purpose, moving banks or moving funds from one account to another can raise a red flag with your lender and impede your approval process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until closing. Although your seller might not know this, the earnest money should be applied to the buyer's closing expenses. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until closing. If your sale falls through, your purchase agreement should dictate to whom your good faith funds should go.
Pacificwide Lending can answer questions about these "Don'ts" and many others. Give us a call: 9254610500.