Things to Avoid While Purchasing a Home
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 furniture store. Keep in mind that until closing, your lender is watching your accounts very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't throw your money around. Although you may be planning ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and vehicle purchases until the closing of your loan. Using plastic to buy new living room furniture could compromise your lending process by distorting your numbers. It's even a bad idea to make those big-ticket purchases with cash. Lenders are examining your cash reserve when considering your loan.
Don't get a new career. Lending Institutions look for a consistent career history on your application forms. Changing jobs may not compromise your ability to qualify for a loan - especially if you are improving your salary. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't move finances around or change banks. As your lending institution considers your mortgage application, you will likely be instructed to provide bank statements for recent months on your checking and savings accounts, money market accounts and other liquid finances. To detect potential fraud, most lending institutions want a thorough paper trail to verify the source of all incoming funds. No matter the reason, changing banks or transferring money might raise a red flag with the lender and slow down your loan process.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be used as earnest money. Until the completion of the deal, the earnest money remains yours. Some sellers might not realize that any good faith funds should go toward your expenses upon closing. Find an attorney or other neutral person who is able to hold the funds or place them in a trust account until closing. The disposition of earnest money, in the case of a failed transaction, should be specified in the contract with your seller.
At Reliance Mortgage Service, Inc, we answer questions about this process every day. Call us at 562 320-0510.