Things to Avoid While Purchasing a Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before your loan closes. We have listed some actions below we suggest you avoid when waiting for closing.

Don't buy luxury items. You may be tempted to buy that new sofa for the soon-to-be-yours den, but it's advisable to stay away from making large purchases like furniture, appliances, electronic equipment, or cars until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. Using cash to buy big items can even create a problem: most lending institutions look at your cash reserve when approving your loan.

Don't look for a new career. Stability in your work history is a positive thing to banks and other lenders. Finding a new job (especially one with a bigger paycheck) may not affect your ability to qualify for your loan. However, switching jobs during your approval process may affect your approval.

Don't change banks or move finances around in your accounts. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other assets) will probably be reviewed as the lending institution considers your approval. In order to detect fraud, lenders want to see clear documentation of how you earn your money and where additional funds come from. Even for innocent purposes, moving around money or changing banks might make it more difficult for the lending institution to document your bank history.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Although some FSBO sellers may not realize this, your earnest money should be applied to your closing expenses. Get an attorney or other neutral person who is able to hang on to the funds or place them in a trust account until closing. If your home purchase fails, the contract with the seller should specify where this earnest money should go.

Tenby J. Dahman The Dahman Team can answer questions about these "Don'ts" and many others. Call us: 3038627760.