Don't Trip Yourself up While Buying your Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Until the house is really yours, there still remain some hoops to jump through. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. Although you may be dreaming of ways to turn your new home into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and car purchases until the closing of your loan. You may send up red flags with your lender if you finance new appliances on your credit cards during your loan process. It's even a bad idea to make those large purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't look for a new job. Stability in your career history is a positive thing to lenders. Getting a new career before you apply for a mortgage may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your process could fail or be bogged down.
Don't move money around or switch banks. While your lending institution reviews your mortgage package, you will probably be required to submit bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid assets. To detect fraud, lenders require clear documentation of how you earn your money and where any additional funds come from. No matter the purpose, switching banks or transferring funds might raise a red flag with your lender and impede your application process.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") for earnest money. Until the sale is complete, the earnest money actually belongs to you. Your earnest funds are to go toward your expenses upon closing; some sellers may not know this. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the deal closes. Your contract should dictate who keeps the deposit if the home purchase fails.
Real Property Finance can answer questions about these "Don'ts" and many others. Call us at 310-379-5997.
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