Things to Avoid While Purchasing a New Home
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What's better than buying a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before your loan closes can be a misstep. Until your keys are in hand, there are still some hoops to jump through. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.
Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. You may send up red flags with your lender if you finance your electronics on your credit cards in the middle of your loan process. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Lending Institutions like to see a consistent career history on your paperwork. Getting a new job before you apply for a loan may not compromise your approval at all. But in some cases, getting a new career during the mortgage loan application process could bring concern and affect your application.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will be reviewed as the lender makes decisions regarding your application. In order to avoid fraud, lenders want to see a clear and consistent picture of how you earn your living and where additional money comes from. Even for practical purposes, moving around finances or changing banks may make it harder for your lending institution to confirm your account history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not to the seller up until the deal closes. Although your seller might not know this, your good faith money must go toward the buyer's closing expenses. It's best to put the funds into a trust account, or get a neutral person, like a lawyer to hold them until closing. The final disposition of earnest money, if your sale falls through, should be documented in the contract with the seller.
First Funding can walk you through the pitfalls of getting a mortgage. Give us a call at (408) 540-0200.