Things to Avoid While Purchasing a New Home
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What's better than buying a bunch of new stuff to adorn your future home? Not much. But making big purchases before your loan closes could be trouble. Until your keys are in hand, there still remain some hoops to jump through. We have given you a list of things below we suggest you avoid when waiting for your loan to close.
Don't buy big-ticket items. Although you may be listing ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to buy big-ticket items can also be a problem: most lending institutions consider your cash reserve when approving your loan.
Don't get a new career. Consistency in your work history is a good thing to lenders. Getting a new career before you start the application process for a loan may not compromise your approval at all. However, finding a new career in the middle of the application process could affect whether or not you are approved.
Don't change banks or move cash around in your accounts. Most lenders will require you to produce recent bank statements on accounts in your name: checking, savings, money market, and other liquid assets. To avoid potential fraud, most lenders want thorough paperwork to document the source of all incoming funds. Even for practical purposes, transferring cash or switching banks may make it harder for the lending institution to document your account history.
Don't give funds directly to your seller (usually in cases of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it remains yours until closing. Some FSBO sellers may not realize that the good faith money is to be applied to your expenses upon closing. An attorney or other type of neutral party can hold your earnest money, or you may put it temporarily into a trust account until closing. Should your sale fall through, the purchase agreement should specify to whom your good faith deposit should go.
VanDyk Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 760-752-4480.