What to Avoid During a Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before the house is realy yours. We have listed some things below you will want to avoid when waiting for your loan to close.
Don't overspend on big-ticket items You may be tempted to buy that new couch for the soon-to-be-yours parlor, but it's best to stay away from making major buys like furniture, appliances, jewelry, or vacations until your home loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. Using cash to purchase expensive items can also be a bad idea: many lending institutions look at your cash reserve when approving your loan.
Don't go on a job search. Lending Institutions like to see a consistent career history on your application. Getting a new job before you apply for a mortgage loan may not affect your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't take your accounts to a new bank or move around your money. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and others) will probably be analyzed as the lending institution makes decisions regarding your mortgage application. The lender looks for a consistent rise and fall of your money over the pay period, in order to avoid fraud. No matter the purpose, moving banks or moving money from one account to another may raise a red flag with your lender and impede your application process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until closing, the good faith deposit actually belongs to you. Some FSBO sellers may not realize that this earnest money must be applied to your expenses upon closing. Find a lawyer or other neutral person who is able to hold the deposit or put it in a trust account until you close. The disposition of earnest money, if your sale falls through, should be included in the purchase agreement with your seller.
Mortgage Max Inc can answer questions about these "Don'ts" and many others. Give us a call at 760-547-2080.