What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until the loan closes. Using credit cards to buy new living room furniture could jeopardize your loan process by distorting your numbers. Since lenders are reviewing your bank accounts, a large cash purchase is also not advised.
Don't look for a new job. Stability in your job history is a positive thing to banks and other lenders. Finding a new job (especially one with a better salary) may not change your ability to qualify for your mortgage loan. However, if you switch careers before your loan is approved, your loan process could fail or be bogged down.
Don't change banks or move money around in your bank accounts. While your lender reviews your mortgage loan package, you will probably be required to produce bank statements for the last few months on your saving and checking accounts, money market funds and other liquid assets. To avoid fraud, lenders will need clear documentation of how you earn your living and where additional wealth comes from. No matter the reason, changing banks or moving funds from one account to another could raise a red flag with the lender and slow down your qualification process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Some FSBO sellers might not realize that your good faith funds must be applied to your expenses upon closing. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be written in the contract with the seller.
At Reliance Mortgage Service, Inc, we answer questions about this process every day. Call us: 562 320-0510.