Things to Avoid While Purchasing a New Home
What's better than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before closing could be trouble. There are still a few major hurdles to jump before the house is realy yours. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.
Don't make expensive purchases. You may be itching to buy that new couch for the soon-to-be-yours living room, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or cars until closing. Using plastic to buy furniture could compromise your lending process by distorting your numbers. Since lending institutions are reviewing your financial accounts, a large cash purchase is also a mistake.
Don't get a new job. Your recent career history should show stability. Changing jobs may not affect your ability to qualify for a loan - especially if you are getting a better salary. But for some, getting a new job during the mortgage application process could bring concern and hinder your approval.
Don't switch banks or move cash around in your accounts. Your lending institution will ask for recent bank statements on accounts in your name: checking, savings, money market, and other liquid assets. Your lender looks for a consistent rise and fall of your money over the month, in order to rule out fraud. Changing banks or transferring funds elsewhere - even if its only to consolidate funds - could make it difficult for the lender to document your funds.
Don't give cash directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith deposit belongs to you, not to the seller until closing. The earnest money is to go toward your expenses closing; your individual seller may not realize this. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the deal closes. If your sale falls through, the purchase contract should dictate to whom this good faith deposit should go.
American Commerce Mortgage can answer questions about these "Don'ts" and many others. Call us at 714-970-9700.