Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. Keep in mind that until closing, your lender is watching your finances very closely. Here are some things to stay clear of during the home buying process to be sure the transaction goes smoothly.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you purchase new appliances on your credit cards in the middle of your loan process. Since lending institutions are examining your bank accounts, a large cash purchase is also a bad idea.
Don't go on a job search. Your recent career history should show consistency. Finding a new career (particularly one with a better salary) may not change your ability to qualify for your mortgage loan. However, if you switch careers before you qualify, your loan process could fail or be bogged down.
Don't change banks or move money around in your bank accounts. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will be studied as the lender considers your mortgage application. To detect fraud, lenders want to see a clear and consistent picture of how you earn your money and where additional wealth comes from. No matter the purpose, changing banks or transferring funds could raise a red flag with the lender and slow down your qualification process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your good faith deposit belongs to you, not to the seller until closing. Although some FSBO sellers may not know this, any good faith funds must be used for the buyer's closing expenses. An attorney or other type of neutral party can hang onto your funds, or you may put them temporarily into a trust account until closing. Your contract should indicate who gets the earnest funds if the transaction fails.
Reliance Mortgage Service, Inc can walk you through the pitfalls of getting a mortgage. Call us at 562 320-0510.