Things to Avoid While Purchasing a Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before closing. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't overspend on big-ticket items Although you may be planning ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until the closing of your loan. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. Since lending institutions are reviewing your bank accounts, a large cash purchase is also a bad idea.
Don't go on a job search. Consistency in your job history is a positive thing to banks and other lenders. Getting a new job may not affect your ability to qualify for a loan - especially if you are going to be making more money. However, switching careers during your approval process may affect your approval.
Don't move cash around or change banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will likely be reviewed as the lender considers your application. To eliminate fraud, lenders need clear documentation of how you earn your living and where any additional money comes from. No matter the reason, switching banks or transferring funds could raise a red flag with the lender and slow your loan process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your earnest money is yours, not the seller's until the deal closes. Although your seller may not know this, your good faith funds should go toward your closing expenses. A neutral party, like an attorney can hold your earnest funds, or you may place them temporarily into a trust account until closing. Should your sale fall through, your purchase contract should indicate where this earnest money should go.
American Commerce Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 714-970-9700.