Things to Avoid While Purchasing a Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. There still remain a few major hurdles to jump before the house is realy yours. Here are some actions to avoid before closing to be sure your transaction goes well.
Don't throw your money around. You may be itching to buy that new sofa for the soon-to-be-yours parlor, but it's advisable to avoid making major purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. It's also a bad idea to make those huge purchases using cash. Lenders are examining your cash reserve when considering your loan.
Don't go on a career search. Consistency in your career history is a good thing to lending institutions. Finding a new career (especially one with a bigger paycheck) may not hinder your ability to qualify for your mortgage loan. However, switching careers in the middle of the application process may affect whether or not you are approved.
Don't switch your accounts to a new bank or move around your money. Bank statements from the last few months for your accounts (savings, checking, money market, and others) will probably be reviewed as the lender makes decisions regarding your mortgage application. To detect fraud, lenders require clear documentation of how you earn your money and where any additional wealth comes from. Switching banks or transferring money to another account - no matter the reason - may make it difficult for the lender to document your funds.
Don't give money directly to your seller (generally in the case of of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Any good faith funds are to go toward your expenses upon closing; some individual sellers might not understand this. It's wise to put the funds into a trust account, or get an attorney to hold them until the closing of the sale. Your contract should specify who keeps the earnest funds if the home purchase fails.
American Commerce Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 714-970-9700.