What to Avoid During your Home Purchase
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Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the loan is approved. Until your keys are in hand, there are still some hoops to jump through. We have listed some actions below you will want to avoid when waiting for closing.
Don't empty your wallet on big-ticket items Although you may be listing ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and car purchases until the closing of your loan. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to purchase expensive items can even be a problem: most lending institutions look at your cash on hand when approving your loan.
Don't look for a new career. Lending Institutions look for a consistent job history on your application forms. Getting a new career before you start the application process for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before approval, your process could fail or be stalled.
Don't move money around or change banks. As the lender reviews your mortgage loan package, you will likely be asked to produce bank statements for recent months on your checking and savings accounts, money market funds and other liquid wealth. Your lender is looking for a steady flow of your money each pay period, in the interest of avoiding fraud. Even for practical reasons, moving around cash or switching banks may make it difficult for your lending institution to verify your account history.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") for earnest money. Until closing, the good faith deposit actually belongs to you. Any good faith funds are to be used for your expenses upon closing; your FSBO seller may not realize this. Find an attorney or other neutral person who is able to hold the funds or place them in a trust account until closing. The disposition of good faith funds, if your transaction falls through, should be written in the purchase agreement with your seller.
Smith-Craine Real Estate Financing can walk you through the pitfalls of getting a mortgage. Call us: 415-406-2330.