What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. It's best to remember that until your keys are in hand, your lender is watching you very closely. We have given you a list of actions below you will want to avoid when waiting for your loan to close.
Don't throw your money around. Although you may be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and vehicle purchases until your loan closes. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a red flag to make those large purchases with cash. Lenders are examining your available cash when considering your loan.
Don't look for a new job. Consistency in your job history is a good thing to banks and other lenders. Getting a new career before you apply for a mortgage loan may not compromise your approval at all. However, finding a new career during the approval process may affect your approval.
Don't move finances around or change banks. While your lending institution considers your mortgage package, you will probably be asked to produce bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid wealth. The lending institution looks for a steady rise and fall of your money each month, in the interest of avoiding fraud. Even for innocent reasons, transferring finances or changing banks may make it more difficult for your lender to document your bank history.
Don't give funds directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Your seller might not know that the good faith funds is to go toward your expenses upon closing. A neutral party, like an attorney can hold your funds, or you may place them temporarily into a trust account until you close. Your contract should dictate who keeps the earnest funds if the home purchase does not go through.
At SkyWest Mortgage, we answer questions about this process every day. Give us a call at (916) 399-5500.