What to Avoid During your Home Purchase
What's more fun than getting a bunch of new stuff to adorn your future home? Not much. But making big purchases before your loan closes can be a mistake. It's wise to remember that until closing, your lender is watching your finances very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't throw your money around. You may be itching to order that new sofa for the soon-to-be-yours parlor, but it's best to stay away from making major purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Since lending institutions are perusing your financial accounts, a large cash purchase is also not advised.
Don't look for a new job. Consistency in your job history is a good thing to banks and other lenders. Finding a new career (especially one with a bigger salary) may not jeopardize your ability to qualify for a mortgage. But in some cases, getting a new job during the loan application process might raise concern and affect your application.
Don't take your accounts to a new bank or move around your cash. Most lenders will instruct the submission of recent bank statements of accounts in your name: checking, savings, money market, and other assets. To avoid potential fraud, most lenders need a thorough paper trail to determine the source of all cash. Even for practical purposes, moving around funds or switching banks might make it more difficult for the lending institution to confirm your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although your seller might not know this, the good faith funds should be used for your closing expenses. Find an attorney or other neutral person who is able to hold the deposit or place it in a trust account until you close. The disposition of good faith funds, if your home purchase fails, should be specified in the contract with your seller.
Reliance Mortgage Service, Inc can answer questions about these "Don'ts" and many others. Call us: 562 320-0510.