Things to Avoid While Buying a New Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Until the house is really yours, there still remain some hoops to jump through. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until the loan closes. You may send up red flags with your lender if you finance new furniture on your credit cards during your loan process. It's even a bad idea to make those large purchases using cash. Lenders are looking at your cash reserve when considering your loan.
Don't go on a career search. Your recent career history should show consistency. Finding a new career (especially one with a better paycheck) may not affect your ability to qualify for a mortgage loan. However, switching careers during the approval process may affect whether or not you are approved.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last two or three months for your accounts (savings, checking, money market, and others) will likely be studied as the lender considers your approval. To detect potential fraud, most loans need a thorough paper trail to document the source of all cash. Changing banks or moving funds to another account - no matter the reason - may make it difficult for your lender to verify your funds.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's up until the deal closes. Although your FSBO seller might not understand this, the earnest money should be used for your closing expenses. We recommend that you put the money into a trust account, or get an attorney to hold it until the closing of the sale. The purchase contract should specify who keeps the money if the transaction fails.
At Pacific Loan Brokers, we answer questions about this process every day. Call us: 877-310-6200.
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