What to Avoid During your Home Purchase
What's more fun than getting a bunch of new furniture to go in your future home? Nothing. But making large purchases before your loan closes could be trouble. Until the keys are handed over, there are still some hoops to jump through. We have listed some actions below you will want to avoid when waiting for your loan to close.
Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you purchase your furniture on your credit cards during your loan process. Using cash to purchase big items can also create an issue: most lenders take into consideration your available cash when approving your mortgage.
Don't look for a new career. Stability in your career history is a good thing to banks and other lenders. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are going to be making more money. But for some, getting a new job during the loan approval process might bring concern and hinder your application.
Don't take your accounts to a new bank or move around your cash. While the lender reviews your loan package, you will likely be asked to provide bank statements for the last few months for your checking and savings accounts, money market funds and other liquid assets. To eliminate fraud, lenders require a clear and consistent picture of how you earn your living and where any additional wealth comes from. Switching banks or transferring finances to another account - for whatever purpose - could hinder the documentation of your accounts.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") to be considered earnest money. As a rule, your good faith deposit belongs to you, not the seller up until the deal closes. Although some individual sellers might not know this, your earnest money must go toward your closing expenses. It's wise to put the money into a trust account, or get an attorney to hold it until the closing of the sale. Should your sale fall through, your purchase agreement should indicate where this earnest money should go.
Pacific Loan Brokers can walk you through the pitfalls of getting a mortgage. Give us a call: 877-310-6200.
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