Don't Trip Yourself up While Buying a Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves their loan. There still remain a few major hurdles to jump before closing. Here are some things to avoid before closing to be sure the transaction goes well.
Don't make expensive purchases. You may be tempted to buy that new sofa for the soon-to-be-yours living room, but it's advisable to stay away from making big ticket buys like furniture, appliances, jewelry, or vacations until closing. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Since lenders are reviewing your bank accounts, a large cash purchase is also not advised.
Don't go on a career search. Lenders look for a consistent career history on your application forms. Changing jobs may not affect your ability to qualify for a loan - particularly if you are getting a bigger paycheck. But for some people, changing careers during the mortgage approval process may bring concern and affect your approval.
Don't switch banks or move money around in your bank accounts. As your lender considers your loan package, you will probably be instructed to submit bank statements for the last few months on your checking and savings accounts, money market accounts and other liquid assets. Your lender wants to see a consistent rise and fall of your money over the pay period, in order to avoid fraud. Switching banks or transferring money elsewhere - no matter the reason - could hinder the documentation of your funds.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith money remains yours. Any earnest funds are to go toward your expenses upon closing; some sellers may not understand this. A neutral party, like an attorney can hang onto your earnest funds, or you may place them temporarily into a trust account until closing. The contract should document to whom the funds go if the home purchase fails.
American Commerce Mortgage can answer questions about these "Don'ts" and many others. Call us at 714-970-9700.