Things to Avoid While Buying a Home
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What's better than getting a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before your loan closes can be a mistake. It's best to remember that until closing, your lender is watching your accounts very closely. Here are some things to stay clear of before closing to be sure the transaction goes well.
Don't throw your money around. Although you may be listing ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and car purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Using cash to buy big-ticket items can even create an issue: most lending institutions take into consideration your cash reserve when approving your mortgage loan.
Don't look for a new career. Lenders like to see a consistent career history on your application forms. Changing jobs may not compromise your ability to qualify for a mortgage loan - especially if you are getting a better salary. But for some, getting a new career during the loan approval process could raise concern and hinder your application.
Don't change banks or move finances around in your accounts. While the lender considers your mortgage package, you will probably be instructed to produce bank statements for recent months on your checking and savings accounts, money market accounts and other liquid wealth. To detect fraud, lenders look for a clear and consistent picture of how you earn your living and where additional money comes from. Even for practical reasons, moving around funds or changing banks could make it more difficult for the lender to confirm your account history.
Don't give 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 closing. The good faith money is to be applied to your expenses closing; some sellers might not understand this. Find an attorney or other neutral person who will hang on to the funds or put them in a trust account until you close. Should your sale fall through, the purchase contract should specify where this earnest money should go.
Real Estate Loan 4 U can walk you through the pitfalls of getting a mortgage. Call us: (408) 255-3978.