What to Avoid During your Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves their loan. There still remain a few major hurdles to jump before the house is realy yours. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't make expensive purchases. Although you will be planning ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until your loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a mistake to make those large purchases using cash. Lenders are examining your cash on hand when considering your loan.
Don't go on a career search. Consistency in your job history is a good thing to banks and other lenders. Finding a new career (particularly one with a bigger paycheck) may not affect your ability to qualify for a loan. But for some people, getting a new career during the mortgage loan approval process may bring concern and hinder your approval.
Don't switch your accounts to a new bank or move around your money. Most lenders will require you to produce recent bank statements for accounts in your name: checking, savings, money market, and other liquid assets. The lending institution looks for a consistent flow of your money each pay period, in the interest of ruling out fraud. Even for practical purposes, transferring cash or switching banks may make it more difficult for your lender to verify your account history.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith deposit remains yours. The FSBO seller might not know that your good faith funds should be used for your expenses upon closing. Get a lawyer or other neutral person who will hang on to the funds or place them in a trust account until you close. If your transaction fails, the contract with the seller should document where this good faith deposit should go.
Nationwide Home Loans can walk you through the pitfalls of getting a mortgage. Call us: (562) 693-5048.