Things to Avoid While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. There are still a few major hurdles to jump before closing. Here are some actions to stay clear of during the home buying process to be sure the transaction goes smoothly.
Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's even a bad idea to make those big purchases with cash. Lenders are looking at your cash reserve when considering your loan.
Don't get a new career. Lenders like to see a consistent career history on your application. Getting a new job before you apply for a mortgage may not get in the way of your approval at all. But for some people, changing jobs during the mortgage approval process might raise concern and affect your approval.
Don't move cash around or change banks. Most lenders will ask for recent bank statements for accounts in your name: checking, savings, money market, and other liquid assets. To eliminate fraud, lenders require a consistent portrayal of how you earn your living and where any additional wealth comes from. No matter the reason, changing banks or transferring money might raise a red flag with your lender and slow your application process.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") for earnest money. As a rule, your good faith deposit belongs to you, not to the seller up until closing. The earnest money is to be applied to your expenses upon closing; some individual sellers may not understand this. Get a lawyer or other neutral person who is able to hang on to the funds or put them in a trust account until you close. The final disposition of earnest funds, if your sale falls through, should be written in the purchase agreement with the seller.
Reliance Mortgage Service, Inc can answer questions about these "Don'ts" and many others. Give us a call: 562 320-0510.