Things to Avoid While Purchasing a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves their loan. Until your keys are in hand, there are still some hurdles to jump. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. Although you may be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using credit cards to buy new living room furniture could jeopardize your loan process by changing your numbers dramatically. Using cash to purchase big-ticket items can also create a mistake: many lending institutions look at your available cash when approving your loan.
Don't go on a career search. Stability in your job history is a good thing to lending institutions. Finding a new job (especially one with a better paycheck) may not change your ability to qualify for your mortgage loan. But in some cases, changing jobs during the mortgage application process may bring concern and hinder your approval.
Don't take your accounts to a new bank or move around your cash. Your lender will instruct the submission of recent bank statements on all of your accounts: checking, savings, money market, and other assets. In order to avoid fraud, lenders look for a consistent portrayal of how you earn your money and where additional money comes from. Even for innocent purposes, transferring funds or changing banks may make it harder for your lending institution to confirm your account history.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. Until the completion of the deal, any good faith deposit actually belongs to you. The earnest money is to go toward your expenses closing; some sellers might not know this. We recommend that you put the funds into a trust account, or get a neutral person, like a lawyer to hold them until closing. The disposition of good faith money, in the case of a failed transaction, should be indicated in the contract with the seller.
At Pacific Loan Brokers, we answer questions about this process every day. Give us a call at 877-310-6200.
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