Don't Trip Yourself up While Buying a Home
What's better than getting a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't make expensive purchases. Although you will be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until the closing of your loan. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to buy expensive items can also be a mistake: most lending institutions take into consideration your available cash when approving your application.
Don't get a new job. Lenders feel comfortable seeing a consistent job history on your application forms. Changing jobs may not compromise your ability to qualify for a loan - especially if you are improving your salary. But for some, switching jobs during the mortgage approval process might raise concern and hinder your application.
Don't switch your accounts to a new bank or move around your finances. Your lending institution will require you to provide recent bank statements of all of your accounts: checking, savings, money market, and other liquid assets. To detect potential fraud, most lending institutions need detailed paperwork to determine the source of all funds. Changing banks or moving funds elsewhere - even if its merely to pool funds - may make it harder for your lender to verify your funds.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until closing. Your seller may not realize that the earnest money must go toward your expenses upon closing. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. The final disposition of earnest funds, in the case of a failed transaction, should be specified in the contract with your seller.
Lighthouse Mortgage Company can walk you through the pitfalls of getting a mortgage. Give us a call: (916) 434-8915.