What to Avoid During a Home Purchase

Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of actions to avoid during this critical time of your home purchase.

Don't buy luxury items. You may be tempted 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 your home loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's also a mistake to make those huge purchases using cash. Lending Institutions are examining your cash reserve when considering your loan.

Don't look for a new job. Consistency in your career history is a positive thing to lending institutions. Getting a new job before you apply for a mortgage may not affect your approval at all. However, if you switch careers before you qualify, your loan process could fail or be slowed down.

Don't move cash around or change banks. Bank statements from the last few months for all of your accounts (savings, checking, money market, and others) will be studied as the lender makes decisions regarding your application. To detect fraud, lenders want to see a consistent portrayal of how you earn your living and where additional wealth comes from. No matter the reason, moving banks or moving funds from one account to another might raise a red flag with the lender and slow your qualification process.

Don't give cash directly to your seller (generally in cases of "for sale by owner") for earnest money. Until closing, the good faith deposit actually belongs to you. Your seller may not realize that your earnest money should be applied to your expenses at closing. Get an attorney or other neutral party who will hold the money or put it in a trust account until closing. The disposition of earnest money, in the case of a failed transaction, should be documented in the contract with the seller.

Reliance Mortgage Service, Inc can answer questions about these "Don'ts" and many others. Give us a call: 5623200510.