What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Until the house is really yours, there still remain some hoops to jump through. We have given you a list of actions below you will want to avoid when waiting for closing.
Don't throw your money around. You may be itching to order that new sofa for the soon-to-be-yours parlor, but it's advisable to stay away from making major purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. Using credit cards to buy new living room furniture could jeopardize your loan process by altering your numbers dramatically. Using cash to buy expensive items can also be an issue: many lending institutions consider your available cash when approving your mortgage.
Don't look for a new career. Your recent work history should show stability. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are improving your salary. But in some cases, switching jobs during the mortgage approval process could bring concern and stymie your approval.
Don't change banks or move money around in your bank accounts. Bank statements from the last two or three months for all of your accounts (checking, savings, money market, and other assets) will probably be reviewed as the lender makes decisions regarding your approval. Your lender is looking for a consistent rise and fall of your money each pay period, in the interest of avoiding fraud. No matter the purpose, changing banks or moving funds from one account to another may raise a red flag with the lender and impede your application process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Although some individual sellers may not understand this, any good faith funds must be used for the buyer's closing expenses. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until you close. The disposition of good faith funds, if your transaction fails, should be included in the contract with the seller.
Lighthouse Mortgage Company can answer questions about these "Don'ts" and many others. Give us a call at (916) 434-8915.