What to Avoid During your Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. There are still a few major hurdles to jump before the house is realy yours. We have given you a list of actions below you will want to stay away from when waiting for your loan to close.
Don't empty your wallet on big-ticket items You may be tempted to buy that new sofa for the soon-to-be-yours parlor, but it's advisable to stay away from making major purchases like furniture, appliances, electronic equipment, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lenders are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Stability in your job history is a positive thing to banks and other lenders. Getting a new job before you start the application process for a mortgage may not jeopardize your approval at all. However, getting a new career in the middle of the approval process might affect your approval.
Don't change banks or move money around in your bank accounts. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will probably be studied as the lending institution makes decisions regarding your loan application. To avoid potential fraud, most lending institutions need a detailed paper trail to determine the source of all cash. Changing banks or moving funds elsewhere - even if its just to pool funds - might hinder the documentation of your funds.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. Some FSBO sellers might not know that the good faith funds should go toward your expenses upon closing. A neutral party, like an attorney can hang onto your funds, or you may place them temporarily into a trust account until closing. Should your sale fall through, your contract with the seller should indicate to whom the good faith deposit should go.
American Commerce Mortgage can answer questions about these "Don'ts" and many others. Call us at 714-970-9700.