What to Avoid During your Home Purchase

What's better than buying a bunch of new stuff to adorn your future home? Not much. But making big ticket purchases before your loan closes could be trouble. There still remain a few major hurdles to jump before the house is realy yours. We have listed some actions below we suggest you avoid when waiting for closing.

Don't overspend on big-ticket items It may be tempting to order that new Turkish rug for the soon-to-be-yours den, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or vacations 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. Using cash to buy big items can also create an issue: many lenders take into consideration your cash reserve when approving your mortgage.

Don't get a new job. Your recent work history should show stability. Getting a new career before you apply for a mortgage loan may not affect your approval at all. However, switching careers during your approval process might influence whether or not you are approved.

Don't change banks or move cash around in your accounts. While the lender reviews your mortgage package, you will likely be required to submit bank statements for the last few months on your saving and checking accounts, money market accounts and other liquid finances. Your lender is looking for a consistent rise and fall of your money over the month, in order to rule out fraud. Switching banks or moving funds elsewhere - for whatever purpose - may hinder the documentation of your funds.

Don't give money directly to your seller (commonly in the case of of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Some sellers may not realize that any good faith funds is to be used for your expenses upon closing. You'll want to put the funds into a trust account, or get a neutral person, like a lawyer to hold them until the deal closes. Your contract should document to whom the deposit goes if the transaction fails.

Tenby J. Dahman The Dahman Team can walk you through the pitfalls of getting a mortgage. Give us a call at 3038627760.