What to Avoid During a 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 lender approves the loan. Until your loan closes, there still remain some hurdles to jump. Here are some actions to stay clear of during the home buying process to assure your transaction goes smoothly.
Don't throw your money around. Although you may be planning ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until your loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's also a bad idea to make those large purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't get a new career. Your recent career history should show consistency. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are going to be making more money. However, finding a new career in the middle of your application process might affect your approval.
Don't move finances around or change banks. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will likely be analyzed as the lender considers your application. To eliminate potential fraud, most lenders need a thorough paper trail to determine the source of all cash. Even for practical reasons, transferring funds or changing banks may make it harder for the lending institution to document your bank history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money belongs to you, not the seller up until the deal closes. Some FSBO sellers might not realize that this good faith money should go toward your expenses at closing. Find a lawyer or other neutral party who can hold the funds or put them in a trust account until closing. Your contract should indicate to whom the funds go if the home purchase fails.
SelectPlus Lending can answer questions about these "Don'ts" and many others. Call us at 818-889-7300.