What to Avoid During your Home Purchase
What's more fun than getting a bunch of new stuff 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 keys are handed over. We have given you a list of things below you will want to stay away from when waiting for your loan to close.
Don't make expensive purchases. You may be tempted to order that new couch for the soon-to-be-yours den, but it's advisable to stay away from making big ticket buys like furniture, appliances, electronic equipment, or vacations until closing. Using credit cards to buy new living room furniture could compromise your loan process by distorting your numbers. Using cash to purchase expensive items can even create a bad idea: most banks take into consideration your cash reserve when approving your application.
Don't get a new career. Stability in your work history is a good thing to lenders. Getting a new job before you start the application process for a mortgage loan may not get in the way of your approval at all. But for some people, changing careers during the mortgage loan application process might raise concern and affect your approval.
Don't switch your accounts to a new bank or move around your finances. Bank statements from recent months for accounts in your name (savings, checking, money market, and other accounts) will likely be studied as the lender considers your approval. The lending institution is looking for a steady rise and fall of your money over the month, in order to rule out fraud. Even for innocent reasons, transferring finances or switching banks might make it more difficult for the lender to verify your bank history.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith money is yours, not the seller's up until the deal closes. Although your seller may not know this, any earnest money must be applied to your closing expenses. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be specified in the contract with the seller.
Lighthouse Mortgage Company can answer questions about these "Don'ts" and many others. Call us: (916) 434-8915.