What to Avoid During your Home Purchase
What's more fun than buying a bunch of new furnishings to adorn your future home? Not much. But making big ticket purchases before your loan closes could be trouble. Keep in mind that until closing, your lender is watching your finances very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't make expensive purchases. Although you will be listing ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's also a red flag to make those huge purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't look for a new job. Lending Institutions like to see a consistent work history on your application. Getting a new job before you apply for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before approval, your process could fail or be bogged down.
Don't move money around or change banks. While your lending institution reviews your mortgage application, you will likely be instructed to submit bank statements for the last two or three months for your checking accounts, savings accounts, money market funds and other liquid wealth. In order to eliminate fraud, lenders need a consistent portrayal of how you earn your living and where additional wealth comes from. Switching banks or moving finances elsewhere - no matter the purpose - may make it difficult for the lender to document your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Any good faith money is to go toward your expenses upon closing; the FSBO seller might not know this. Get an attorney or other neutral person who is able to hang on to the deposit or place it in a trust account until closing. The purchase agreement should dictate who gets the earnest funds if the transaction falls through.
Mortgage Max Inc can answer questions about these "Don'ts" and many others. Give us a call: 760-547-2080.