Things to Avoid While Purchasing a Home
What's more fun than getting a bunch of new furniture to adorn your future home? Nothing. But making large purchases before your loan closes can be a mistake. Keep in mind that until you get the keys, your lender is watching you very closely. Here are some actions to stay clear of during the home buying process to be sure your transaction goes well.
Don't make expensive purchases. It may be tempting to buy that new Turkish rug for the soon-to-be-yours parlor, but it's best to stay away from making major buys like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. It's also a bad idea to make those large purchases with cash. Lenders are examining your cash reserve when considering your loan.
Don't look for a new career. Stability in your job history is a positive thing to lenders. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, finding a new career during the loan process may affect your approval.
Don't change banks or move cash around in your bank accounts. Bank statements from recent months for accounts in your name (savings, checking, money market, and other accounts) will probably be studied as the lender makes decisions regarding your application. The lender will need to see a consistent rise and fall of your money over the pay period, in order to rule out fraud. No matter the reason, changing banks or moving funds from one account to another might raise a red flag with the lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith deposit is yours, not the seller's up until closing. Although your FSBO seller might not realize this, your good faith money must go toward your closing expenses. Find a lawyer or other neutral party who will hold the funds or place them in a trust account until closing. Should your sale fall through, the purchase contract should dictate to whom the earnest money should go.
Reliance Mortgage Service, Inc can answer questions about these "Don'ts" and many others. Give us a call: 562 320-0510.