Don't Trip Yourself up While Buying your New Home
What's better than getting a bunch of new stuff to adorn your future home? Not much. But making big purchases before your loan closes could be trouble. Until your loan closes, there still remain some hoops to jump through. We have given you a list of actions below we suggest you stay away from when waiting for closing.
Don't overspend on big-ticket items Although you may be planning ways to turn your new home into a showplace, try to stay away from 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. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a mistake to make those large purchases using cash. Lending Institutions are looking at your available cash when considering your loan.
Don't look for a new career. Lending Institutions look for a consistent career history on your application forms. Finding a new job (particularly one with a better salary) may not change your ability to qualify for a loan. But in some cases, changing jobs during the loan application process might bring concern and affect your application.
Don't switch your accounts to a new bank or move around your money. As the lender considers your loan package, you will probably be asked to produce bank statements for recent months for your saving and checking accounts, money market accounts and other liquid wealth. To avoid potential fraud, most lenders need a thorough paper trail to determine the source of all incoming funds. Even for practical purposes, moving around cash or switching banks might make it difficult for your lending institution to verify your account history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any earnest money remains yours. Although some FSBO sellers might not understand this, the good faith money should be used for your closing expenses. An attorney or other type of neutral party can hold onto your deposit, or you may put it temporarily into a trust account until closing. If your transaction fails, the contract with the seller should specify where your earnest money should go.
American Commerce Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 714-970-9700.