What to Avoid During your Home Purchase

What's more fun than getting a bunch of new stuff to go in your future home? Nothing. But making big ticket purchases before your loan closes could be trouble. It's wise to remember that until you get the keys, your lender is watching you very closely. Here are some things to refrain from during the home buying process to be sure your transaction goes smoothly.

Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Using plastic to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Using cash to buy big items can also be a mistake: many lenders take into consideration your cash reserve when approving your mortgage loan.

Don't look for a new career. Lenders look for a consistent job history on your paperwork. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are getting a better salary. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.

Don't change banks or move finances around in your accounts. Bank statements from recent months for all of your accounts (savings, checking, money market, and other assets) will probably be analyzed as the lending institution makes decisions regarding your application. Your lending institution looks for a consistent rise and fall of your funds over the month, in order to avoid fraud. Even for practical purposes, moving around cash or switching banks may make it harder for your lending institution to confirm your account history.

Don't give money directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. Until the completion of the deal, the earnest money actually belongs to you. Although your seller may not know this, the good faith money should go toward your closing expenses. You'll need to put the funds into a trust account, or get an attorney to hold them until closing. The purchase agreement should indicate who gets the earnest funds if the home purchase falls through.

Reliant Mortgage Services can answer questions about these "Don'ts" and many others. Call us: 956-622-4307.