What to Avoid During your Home Purchase
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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 loan is approved. There still remain a few major hurdles to jump before closing. Here are some things to stay clear of before closing to be sure your transaction goes well.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy furniture could compromise your loan process by changing your numbers dramatically. Since lending institutions are reviewing your financial accounts, a large cash purchase is also a mistake.
Don't go job hunting. Your recent job history should show consistency. Getting a new career before you apply for a mortgage may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your process could fail or be bogged down.
Don't move money around or switch banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other assets) will likely be analyzed as the lending institution makes decisions regarding your loan application. In order to avoid fraud, lenders look for a clear and consistent picture of how you earn your money and where additional wealth comes from. Even for innocent purposes, moving around funds or switching banks might make it more difficult for the lender to verify your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the sale is complete, any good faith deposit actually belongs to you. Any earnest funds are to be used for your expenses upon closing; a FSBO seller may not realize this. A neutral party, like an attorney can hang onto your funds, or you may place them temporarily into a trust account until you close. Should your home purchase fail, the contract with the seller should specify to whom your good faith funds should go.
Straight Talk Lending can answer questions about these "Don'ts" and many others. Call us at 714-737-6717.