Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves the loan. There are still a few major hurdles to jump before your loan closes. We have given you a list of things below you will want to stay away from when waiting for closing.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy furniture could jeopardize your lending process by altering your numbers dramatically. It's also a mistake to make those large purchases using cash. Lending Institutions are examining your available cash when considering your loan.
Don't look for a new job. Stability in your job history is a positive thing to lending institutions. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are getting a better salary. But in some cases, changing careers during the mortgage loan approval process could bring concern and hinder your application.
Don't switch your accounts to a new bank or move around your cash. As your lending institution reviews your loan application, you will likely be asked to submit bank statements for the last two or three months for your checking accounts, savings accounts, money market funds and other liquid assets. The lending institution looks for a steady rise and fall of your money over the pay period, in the interest of avoiding fraud. Even for practical reasons, transferring money or switching banks might make it difficult for the lender to confirm your bank history.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your good faith deposit is yours, not the seller's until closing. Although your FSBO seller might not know this, the good faith money should be applied to your closing expenses. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. Your purchase contract should indicate to whom the money goes if the home purchase fails.
American Commerce Mortgage can answer questions about these "Don'ts" and many others. Call us: 714-970-9700.