What to Avoid During a Home Purchase
What's more fun than buying a bunch of new stuff to adorn your future home? Nothing. But making large purchases before your loan closes could be trouble. Until your loan closes, there are still some hurdles to jump. Here are some things to refrain from before closing to assure your transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Because lenders are perusing your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Consistency in your work history is a positive thing to banks and other lenders. Getting a new career before you start the application process for a mortgage may not jeopardize your approval at all. But for some, switching jobs during the mortgage loan application process could bring concern and stymie your approval.
Don't switch your accounts to a new bank or move around your cash. Your lending institution will ask for recent bank statements of accounts in your name: checking, savings, money market, and other assets. Your lender wants to see a steady flow of your money each pay period, in order to avoid fraud. No matter the purpose, switching banks or transferring money could raise a red flag with the lender and slow down your loan process.
Don't hand over a "good faith" deposit 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 the sale is final. Although your FSBO seller may not understand this, your earnest money should go toward the buyer's closing expenses. Get an attorney or other neutral person who is able to hang on to the money or place it in a trust account until closing. The contract should document who gets the earnest funds if the transaction falls through.
At Lighthouse Mortgage Company, we answer questions about this process every day. Call us: (916) 434-8915.