What to Avoid During your Home Purchase
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What's more fun than buying a bunch of new stuff to go in your future home? Nothing. But making big purchases before closing can be an error. Keep in mind that until closing, your lender is watching your accounts very closely. We have listed some actions below we suggest you avoid when waiting for closing.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you purchase your appliances on your credit cards during your loan process. Using cash to buy big items can also create a problem: many lending institutions consider your available cash when approving your mortgage loan.
Don't look for a new career. Your recent work history should show consistency. Finding a new job (particularly one with a better paycheck) may not affect your ability to qualify for your mortgage. However, finding a new career during your approval process might affect whether or not you are approved.
Don't change banks or move money around in your accounts. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other assets) will likely be analyzed as the lender considers your mortgage application. To eliminate fraud, lenders need a clear and consistent picture of how you earn your living and where additional money comes from. Switching banks or transferring finances elsewhere - no matter the reason - might hinder the documentation of your accounts.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Your earnest money is to go toward your expenses upon closing; some FSBO sellers may not realize this. An attorney or other type of neutral party can hold onto your earnest money, or you may put it temporarily into a trust account until closing. Should your home purchase fail, your contract with the seller should specify to whom the good faith deposit should go.
PLN Associates, Inc can walk you through the pitfalls of getting a mortgage. Call us: 425-452-5345.