Things to Avoid While Buying a New Home
What's better than getting a bunch of new furnishings to adorn your future home? Nothing. But making big purchases before closing can be harmful. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be tempted to order that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making large purchases like furniture, appliances, jewelry, or cars until closing. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Using cash to buy big-ticket items can also create a problem: most lending institutions look at your cash reserve when approving your mortgage loan.
Don't get a new career. Lenders like to see a consistent job history on your paperwork. Finding a new job (particularly one with a bump in salary) may not jeopardize your ability to qualify for a mortgage loan. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't move cash around or switch banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will likely be reviewed as the lender considers your application. To eliminate fraud, lenders will need clear documentation of how you earn your living and where additional money comes from. Even for innocent purposes, moving around cash or switching banks may make it difficult for your lending institution to document your account history.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although your seller may not realize this, the good faith money must go toward the buyer's closing expenses. Find an attorney or other neutral party who is able to hold the money or place it in a trust account until closing. The purchase agreement should indicate where the funds go if the home purchase fails.
Reliance Mortgage Service, Inc can answer questions about these "Don'ts" and many others. Call us at 562 320-0510.