Things to Avoid While Buying a New Home
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Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves the loan. There still remain a few major hurdles to jump before your loan closes. Here are some things to stay clear of during the home buying process to assure the transaction goes well.
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 keep away from big purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. It's also a red flag to make those huge purchases with cash. Lenders are examining your available cash when considering your loan.
Don't go on a job search. Your recent career history should show consistency. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, switching careers in the middle of your approval process may influence whether or not you are approved.
Don't switch your accounts to a new bank or move around your cash. While your lender considers your mortgage loan application, you will likely be required to provide bank statements for recent months for your saving and checking accounts, money market funds and other liquid wealth. To eliminate fraud, lenders want to see clear documentation of how you earn your living and where additional money comes from. Switching banks or moving finances to another account - no matter the reason - may make it difficult for the lender to verify your funds.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith deposit belongs to you, not the seller up until closing. Your earnest funds are to go toward your expenses closing; your individual seller might not realize this. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. Your purchase agreement should document who gets the money if the home purchase does not go through.
PFS Funding can walk you through the pitfalls of getting a mortgage. Call us: (925) 560-7644.