Things to Avoid While Buying a Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the lender approves their loan. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some things to stay clear of before closing to assure the transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Using cash to purchase big-ticket items can even be a mistake: many lenders take into consideration your available cash when approving your mortgage.
Don't look for a new job. Lending Institutions look for a consistent work history on your application. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. But for some, getting a new job during the loan approval process may raise concern and stymie your application.
Don't switch your accounts to a new bank or move around your finances. As the lending institution reviews your mortgage loan package, you will probably be instructed to submit bank statements for the last two or three months on your checking accounts, savings accounts, money market accounts and other liquid wealth. In order to detect fraud, lenders look for a consistent portrayal of how you earn your living and where additional money comes from. Even for innocent purposes, moving around money or changing banks may make it harder for the lender to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller up until the sale is final. Although your seller might not understand this, your good faith money should go toward your closing expenses. You'll want to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until closing. The purchase agreement should dictate where the funds go if the home purchase does not go through.
Reliance Mortgage Service, Inc can answer questions about these "Don'ts" and many others. Call us at 562 320-0510.