What to Avoid During your Home Purchase
What's better than buying a bunch of new furniture to go in your future home? Not much. But making large purchases before closing could be trouble. Until the keys are handed over, there still remain some hurdles to jump. We have listed some things below we suggest you avoid when waiting for your loan to close.
Don't overspend on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, cars, appliances, or vacations until the loan closes. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lending institutions are perusing your bank accounts, a large cash purchase is also not advised.
Don't go on a career search. Lenders feel comfortable seeing a consistent work history on your application forms. Changing jobs may not affect your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, getting a new career in the middle of your loan process may affect whether or not you are approved.
Don't change banks or move money around in your bank accounts. Most lenders will instruct the submission of recent bank statements on your accounts: checking, savings, money market, and other assets. Your lender hopes to see a consistent rise and fall of your funds over the month, in order to rule out fraud. Switching banks or moving funds elsewhere - even if its just to consolidate funds - may hinder the review of your accounts.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. Although some individual sellers may not understand this, the good faith funds should be used for your closing expenses. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The purchase agreement should dictate who gets the earnest funds if the home purchase does not go through.
Lighthouse Mortgage Company can answer questions about these "Don'ts" and many others. Call us at (916) 434-8915.