What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before the keys are handed over. We have listed some actions below you will want to avoid when waiting for your loan to close.
Don't overspend on big-ticket items Although you will be listing ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Using plastic to buy new living room furniture could compromise your loan process by distorting your numbers. Using cash to purchase big items can also create a problem: many banks look at your cash reserve when approving your mortgage.
Don't go on a job search. Your recent work history should show stability. Getting a new job may not compromise your ability to qualify for a loan - especially if you are getting a better salary. But in some cases, getting a new job during the loan approval process might raise concern and stymie your approval.
Don't change banks or move money around in your accounts. As the lender considers your loan package, you will probably be instructed to submit bank statements for recent months on your saving and checking accounts, money market funds and other liquid assets. In order to detect fraud, lenders will need clear documentation of how you earn your money and where any additional funds come from. Switching banks or moving funds to another account - even if its only to pool funds - might hinder the documentation of your accounts.
Don't give cash directly to your seller (usually in cases of "for sale by owner") to be considered a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's until the sale is final. Although some FSBO sellers might not realize this, the good faith funds should be used for the buyer's closing expenses. Get an attorney or other neutral party who can hang on to the money or put it in a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be indicated in the contract with the seller.
At Brimor Mortgage, we answer questions about this process every day. Call us at 949-544-4908.
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