Things to Avoid While Purchasing a New Home
What's more fun than getting a bunch of new furnishings to go in your future home? Not much. But buying big ticket items before closing could be trouble. There are still a few major hurdles to jump before the house is realy yours. Here are some actions to stay clear of before closing to be sure the transaction goes well.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's also a mistake to make those huge purchases with cash. Lending Institutions are examining your available cash when considering your loan.
Don't get a new career. Your recent work history should show stability. Getting a new career before you start the application process for a loan may not affect your approval at all. However, if you switch careers before you qualify, your process could fail or be bogged down.
Don't move finances around or change banks. As the lending institution reviews your loan application, you will probably be asked to provide bank statements for the last two or three months for your saving and checking accounts, money market accounts and other liquid wealth. To eliminate fraud, lenders require a consistent portrayal 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 deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's until closing. Your earnest funds are to be used for your expenses closing; a FSBO seller might not understand this. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until closing. The disposition of earnest funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.
At Asset Alliance Mortgage, we answer questions about this process every day. Give us a call: (760) 632-7701.