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 taking their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before your loan closes. We have given you a list of actions below you will want to stay away from when waiting for your loan to close.
Don't make expensive purchases. Although you will be dreaming of ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Using credit cards to buy new living room furniture could jeopardize your lending process by altering your numbers dramatically. Because lenders are perusing your financial accounts, a large cash purchase is also not advised.
Don't get a new job. Lenders like to see a consistent work history on your application forms. Getting a new career before you apply for a loan may not affect your approval at all. However, if you switch careers before approval, your mortgage process could fail or be slowed down.
Don't switch banks or move finances around in your accounts. Your lending institution will ask for recent bank statements on your accounts: savings, checking, money market, and other liquid assets. To eliminate potential fraud, most lending institutions need thorough paperwork to verify the source of all incoming funds. Even for practical reasons, moving around funds or changing banks may make it harder for your lender to document your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Your good faith money is to go toward your expenses upon closing; a individual seller might not understand this. An attorney or other type of neutral party can hold your earnest funds, or you may place them temporarily into a trust account until you close. The purchase agreement should indicate to whom the funds go if the home purchase does not go through.
Nationwide Home Loans can answer questions about these "Don'ts" and many others. Give us a call at (562) 693-5048.