What to Avoid During your Home Purchase
What's more fun than buying a bunch of new furnishings to go in your future home? Not much. But making large purchases before your loan closes can be harmful. There are still a few major hurdles to jump before closing. Here are some things to refrain from before closing to assure the transaction goes smoothly.
Don't buy luxury items. Although you will be planning ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and vehicle purchases until your loan closes. Your lender may send up red flags if you buy new furniture on your credit cards during your loan process. Because lenders are examining your bank accounts, a large cash purchase is also a mistake.
Don't look for a new career. Consistency in your career history is a good thing to lenders. Finding a new job (especially one with a bump in salary) may not affect your ability to qualify for a mortgage loan. But for some, getting a new job during the mortgage application process may bring concern and stymie your application.
Don't take your accounts to a new bank or move around your money. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will likely be analyzed as the lender makes decisions regarding your application. To avoid potential fraud, most loans need a thorough paper trail to determine the source of all incoming funds. Switching banks or transferring funds to another account - even if its merely to pool funds - could make it difficult for the lender to verify your funds.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until closing. The earnest money is to go toward your expenses closing; your FSBO seller might not know this. Find a lawyer or other neutral party who can hold the funds or put them in a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be written in the contract with the seller.
Asset Alliance Mortgage can answer questions about these "Don'ts" and many others. Call us at (760) 632-7701.