What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the loan is approved. There still remain a few major hurdles to jump before the keys are handed over. We have listed some actions below you will want to avoid when waiting for closing.

Don't throw your money around. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, cars, appliances, or vacations until the loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.

Don't look for a new career. Lending Institutions like to see a consistent work history on your application forms. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before approval, your mortgage process could fail or be slowed down.

Don't move finances around or switch banks. While the lending institution reviews your mortgage loan application, you will probably be required to produce bank statements for the last few months on your checking accounts, savings accounts, money market accounts and other liquid assets. The lender is looking for a consistent rise and fall of your funds each month, in order to avoid fraud. Changing banks or transferring finances to another account - even if its just to pool funds - may make it harder for your lender to document your funds.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not to the seller up until closing. The earnest funds are to go toward your expenses upon closing; some FSBO sellers might not realize this. A neutral party, like an attorney can hold your earnest funds, or you may put them temporarily into a trust account until you close. The disposition of earnest funds, in the case of a failed transaction, should be indicated in the purchase agreement with your seller.

Pacificwide Lending can walk you through the pitfalls of getting a mortgage. Give us a call at 9254610500.