What to Avoid During a Home Purchase

Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves their loan. Until closing, there still remain some hoops to jump through. We have given you a list of things below you will want to stay away from when waiting for closing.

Don't buy big-ticket items. You may be itching to order that new Turkish rug for the soon-to-be-yours parlor, but it's best to avoid making large purchases like furniture, appliances, jewelry, or vacations until closing. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Using cash to buy big-ticket items can even create a problem: many lenders consider your cash reserve when approving your mortgage loan.

Don't go on a job search. Lenders feel comfortable seeing a consistent work history on your application. Getting a new career before you start the application process for a loan may not jeopardize your approval at all. However, if you switch careers before approval, your mortgage process could fail or be bogged down.

Don't move finances around or switch banks. As your lender reviews your loan application, you will likely be asked to produce bank statements for the last few months for your checking and savings accounts, money market funds and other liquid finances. To avoid potential fraud, most lending institutions need a thorough paper trail to verify the source of all funds. Changing banks or moving funds elsewhere - no matter the purpose - may hinder the documentation of your accounts.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Although your seller might not understand this, your good faith money must be used for your closing expenses. An attorney or other type of neutral party can hang onto your earnest funds, or you may place them temporarily into a trust account until you close. Should your sale fall through, the purchase agreement should document to whom your good faith funds should go.

Reliance Mortgage Service, Inc can walk you through the pitfalls of getting a mortgage. Give us a call at 5623200510.

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