Don't Trip Yourself up While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. It's wise to remember that until you get the keys, your lender is watching you very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. Your lender may send up red flags if you finance your furniture on your credit cards in the middle of your loan process. Using cash to buy expensive items can even be a mistake: many lenders take into consideration your cash reserve when approving your loan.
Don't get a new career. Lenders feel comfortable seeing a consistent work history on your application. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't change banks or move cash around in your bank accounts. Your lending institution will ask for recent bank statements of accounts in your name: savings, checking, money market, and other liquid assets. Your lender wants to see a consistent rise and fall of your money over the month, in order to rule out fraud. No matter the reason, changing banks or transferring funds might raise a red flag with the lender and slow down your qualification process.
Don't give money directly to your seller (usually in cases of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although some individual sellers may not know this, your good faith funds must be applied to your closing expenses. Find a lawyer or other neutral person who can hold the money or place it in a trust account until you close. Your purchase agreement should specify where the funds go if the home purchase does not go through.
Cal Coast Financial Corp can answer questions about these "Don'ts" and many others. Call us at (510) 683-9850.
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