Don't Trip Yourself up While Buying a New Home
What's more fun than buying a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before your loan closes can be an error. It's best to remember that until you get the keys, your lender is watching you very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items Although you will be listing ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and car purchases until the closing of your loan. You may send up red flags with your lender if you purchase your appliances on your credit cards during your loan process. Since lending institutions are examining your financial accounts, a large cash purchase is also a bad idea.
Don't get a new career. Lenders feel comfortable seeing a consistent career history on your application forms. Getting a new career before you apply for a mortgage loan may not get in the way of your approval at all. However, finding a new job during the application process may influence your approval.
Don't switch your accounts to a new bank or move around your money. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other accounts) will probably be analyzed as the lender considers your approval. In order to eliminate fraud, lenders need a clear and consistent picture of how you earn your living and where additional wealth comes from. Even for practical purposes, transferring finances or switching banks could make it harder for your lender to confirm your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until the transaction is final. Although your seller might not realize this, the good faith funds should go toward the buyer's closing expenses. An attorney or other type of neutral party can hold onto your deposit, or you may put it temporarily into a trust account until you close. The final disposition of good faith funds, if your transaction falls through, should be documented in the contract with the seller.
Lighthouse Mortgage Company can walk you through the pitfalls of getting a mortgage. Give us a call at (916) 434-8915.