What to Avoid During a Home Purchase

What's better than buying a bunch of new stuff to adorn your future home? Nothing. But making big ticket purchases before your loan closes can be harmful. It's wise to remember that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't throw your money around. Although you may be listing ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and vehicle purchases until your loan closes. Using plastic to buy new living room furniture could jeopardize your lending process by distorting your numbers. Using cash to buy expensive items can also create a mistake: many lending institutions look at your available cash when approving your loan.

Don't get a new career. Your recent career history should show consistency. Finding a new job (especially one with a bump in salary) may not hinder your ability to qualify for your loan. However, switching jobs in the middle of the approval process may influence whether or not you are approved.

Don't move money around or change banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will likely be studied as the lender considers your mortgage application. The lender looks for a steady rise and fall of your funds over the pay period, in the interest of avoiding fraud. Even for practical purposes, moving around funds or changing banks may make it more difficult for the lending institution to document your bank history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller up until closing. Your good faith money is to be used for your expenses upon closing; your individual seller may not realize this. An attorney or other type of neutral party can hold your earnest money, or you may put it temporarily into a trust account until closing. Your purchase agreement should dictate to whom the money goes if the transaction fails.

At Tenby J. Dahman The Dahman Team , we answer questions about this process every day. Call us at 3038627760.