What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Keep in mind that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of things 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 dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. 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 job. Lenders like to see a consistent job history on your application. Finding a new career (particularly one with a bump in salary) may not change your ability to qualify for a loan. However, getting a new career during the loan process could influence your approval.
Don't change banks or move finances around in your bank accounts. Most lenders will ask for recent bank statements on your accounts: checking, savings, money market, and other assets. To detect potential fraud, most lending institutions want detailed paperwork to verify the source of all funds. Even for innocent reasons, transferring money or changing banks might make it harder for the lending institution to document your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Any earnest funds are to go toward your expenses closing; some FSBO sellers might not know this. We recommend that you put the funds into a trust account, or get a neutral person, like a lawyer to hold them until closing. If your home purchase fails, your purchase agreement should document to whom the earnest money should go.
At Reliance Mortgage Service, Inc, we answer questions about this process every day. Call us at 562 320-0510.