What to Avoid During a Home Purchase
What's better than getting a bunch of new furniture to go in your future home? Not much. But making large purchases before closing can be a misstep. Until closing, there still remain some hurdles to jump. We have listed some actions below we suggest you stay away from when waiting for your loan to close.
Don't overspend on big-ticket items It may be tempting to buy that new easy-chair for the soon-to-be-yours living room, but it's best to avoid making large buys like furniture, appliances, jewelry, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a bad idea to make those big-ticket purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't get a new career. Your recent career history should show consistency. Changing jobs may not compromise your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. But in some cases, changing jobs during the mortgage approval process may raise concern and stymie your application.
Don't switch banks or move finances 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 lending institution considers your loan application. In order to avoid fraud, lenders look for clear documentation of how you earn your money and where additional wealth comes from. Switching banks or transferring finances to another account - for whatever reason - could hinder the review of your accounts.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Although some individual sellers may not understand this, the good faith money should be applied to the buyer's closing expenses. A neutral party, like an attorney can hold your earnest money, or you may put it temporarily into a trust account until you close. Should your home purchase fail, the contract with the seller should specify to whom this good faith deposit should go.
Reliance Mortgage Service, Inc can answer questions about these "Don'ts" and many others. Give us a call at 562 320-0510.