Things to Avoid While Buying a Home
What's more fun than getting a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. There still remain a few major hurdles to jump before the house is realy yours. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't make expensive purchases. You may be tempted to buy that new couch for the soon-to-be-yours den, but it's advisable to avoid making big ticket purchases like furniture, appliances, electronic equipment, or vacations until closing. Your lender may send up red flags if you buy new electronics on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also create a mistake: most lenders take into consideration your available cash when approving your mortgage loan.
Don't look for a new job. Consistency in your work history is a positive thing to banks and other lenders. Finding a new job (particularly one with a bump in salary) may not change your ability to qualify for your mortgage loan. However, switching jobs in the middle of your application process may influence whether or not you are approved.
Don't change banks or move finances around in your accounts. Bank statements from the last few months for your accounts (checking, savings, money market, and others) will likely be reviewed as the lending institution considers your loan application. In order to eliminate fraud, lenders require clear documentation of how you earn your living and where any additional wealth comes from. Switching banks or moving funds to another account - no matter the reason - might make it difficult for the lender to verify your funds.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's up until closing. Your seller may not realize that the good faith funds must be applied to your expenses upon closing. 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 closing. If your sale falls through, your contract with the seller should specify to whom this good faith deposit should go.
Lighthouse Mortgage Company can walk you through the pitfalls of getting a mortgage. Call us at (916) 434-8915.