Things to Avoid While Purchasing a New Home
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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. Until your loan closes, there are still some hoops to jump through. We have listed some things below we suggest you stay away from when waiting for your loan to close.
Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Using plastic to buy furniture could jeopardize your loan process by changing your numbers dramatically. Using cash to purchase big-ticket items can even be a bad idea: many lenders consider your cash reserve when approving your application.
Don't go on a job search. Stability in your job history is a positive thing to lending institutions. Getting a new job before you start the application process for a loan may not get in the way of your approval at all. However, if you switch careers before approval, your mortgage process could fail or be slowed down.
Don't move cash around or change banks. Your lending institution will ask for recent bank statements of all of your accounts: checking, savings, money market, and other liquid assets. The lending institution is looking for a steady rise and fall of your funds over the month, in order to rule out fraud. No matter the purpose, changing banks or transferring funds might raise a red flag with the lender and slow down your approval process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith deposit actually belongs to you. Any good faith funds are to be applied to your expenses closing; some FSBO sellers may not know this. An attorney or other type of neutral party can hold your earnest funds, or you may place them temporarily into a trust account until closing. The purchase contract should specify to whom the deposit goes if the home purchase fails.
Sierra View Financial Corp can walk you through the pitfalls of getting a mortgage. Call us: 916-989-6222.