Things to Avoid 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 says "yes" and the loan is approved. Keep in mind that until closing, your lender is watching your accounts very closely. We have given you a list of things below you will want to stay away from when waiting for closing.
Don't buy luxury items. Although you may be planning ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and vehicle purchases until your loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's also a bad idea to make those large purchases with cash. Lenders are looking at your available cash when considering your loan.
Don't get a new career. Your recent career history should show stability. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are improving your salary. But for some people, switching jobs during the loan approval process could bring concern and stymie your application.
Don't switch your accounts to a new bank or move around your cash. While the lending institution considers your mortgage package, you will likely be instructed to submit bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid assets. The lender hopes to see a steady flow of your funds each month, in order to avoid fraud. No matter the purpose, changing banks or transferring money could raise a red flag with the lender and impede your application process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Some FSBO sellers may not know that your earnest money must go toward your expenses upon closing. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. If your sale falls through, your purchase agreement should indicate where this earnest money should go.
At Reliance Mortgage Service, Inc, we answer questions about this process every day. Give us a call at 562 320-0510.