What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. It's best to remember that until you get the keys, your lender is watching you very closely. We have given you a list of actions below you will want to avoid when waiting for your loan to close.

Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's even a mistake to make those big-ticket purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.

Don't go on a job search. Your recent career history should show stability. Finding a new job (particularly one with a bump in salary) may not jeopardize your ability to qualify for a mortgage loan. However, switching careers during your application process could influence your approval.

Don't switch your accounts to a new bank or move around your cash. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will likely be reviewed as the lending institution makes decisions regarding your loan application. Your lender looks for a steady flow of your funds each pay period, in order to rule out fraud. Even for practical reasons, transferring finances or changing banks might make it difficult for the lending institution to document your account history.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until the deal closes. Your seller might not know that your earnest money should be applied to your expenses at closing. Get a lawyer or other neutral party who is able to hang on to the funds or put them in a trust account until you close. Should your sale fall through, the contract with the seller should dictate where this good faith funds should go.

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