What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before the house is realy yours. We have given you a list of actions below we suggest you avoid when waiting for your loan to close.
Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. Because lenders are perusing your financial accounts, a large cash purchase is also a bad idea.
Don't get a new career. Consistency in your work history is a positive thing to banks and other lenders. Getting a new job before you apply for a loan may not get in the way of your approval at all. But for some, changing careers during the mortgage loan application process could raise concern and affect your application.
Don't move cash around or change banks. While the lender considers your loan package, you will likely be required to submit bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid finances. The lending institution needs to see a consistent flow of your funds each month, in order to avoid fraud. Even for practical reasons, moving around finances or switching banks could make it harder for the lending institution to confirm your bank history.
Don't deliver a "good faith" deposit 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 until closing. Any earnest money is to go toward your expenses upon closing; your individual seller may not understand this. Find an attorney or other neutral person who can hold the funds or place them in a trust account until you close. The disposition of earnest money, if your home purchase fails, should be documented in the contract with your seller.
At Asset Alliance Mortgage, we answer questions about this process every day. Give us a call: (760) 632-7701.