Things to Avoid While Purchasing a New Home
What's more fun than buying a bunch of new stuff to go in your future home? Nothing. But making big ticket purchases before your loan closes can be a mistake. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until your loan closes. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy big items can even be a mistake: many banks look at your available cash when approving your mortgage.
Don't look for a new career. Lending Institutions look for a consistent work history on your application. Getting a new career before you start the application process for a loan may not jeopardize your approval at all. However, switching jobs during your approval process may affect whether or not you are approved.
Don't change banks or move cash around in your accounts. Bank statements from recent months for accounts in your name (savings, checking, money market, and other accounts) will probably be reviewed as the lender makes decisions regarding your application. To detect fraud, lenders want to see clear documentation of how you earn your living and where any additional money comes from. No matter the reason, switching banks or moving money from one account to another could raise a red flag with the lender and slow down your application process.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller up until the sale is final. Your earnest money is to be used for your expenses closing; some FSBO sellers might not know this. Find an attorney or other neutral party who is able to hang on to the funds or put them in a trust account until you close. Should your sale fall through, the contract with the seller should indicate where the earnest money should go.
Asset Alliance Mortgage can answer questions about these "Don'ts" and many others. Give us a call at (760) 632-7701.