What to Avoid During a Home Purchase

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Until your keys are in hand, there still remain some hurdles to jump. Here are some things to refrain from before closing to be sure the transaction goes smoothly.

Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could change suddenly if you purchase new furniture using credit cards. It's also a bad idea to make those big purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.

Don't look for a new career. Your recent work history should show consistency. Getting a new job may not affect your ability to qualify for a loan - especially if you are going to be making more money. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.

Don't move cash around or change banks. Most lenders will instruct the submission of recent bank statements on your accounts: savings, checking, money market, and other liquid assets. In order to avoid fraud, lenders require clear documentation of how you earn your living and where any additional funds come from. Switching banks or transferring money to another account - even if its just to consolidate funds - could hinder the review of your accounts.

Don't give money directly to your seller (usually in the case of of "for sale by owner") for earnest money. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Your FSBO seller might not know that the good faith money must be applied to your expenses at closing. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The contract should specify who gets the deposit if the home purchase does not go through.

At Not Your Average Lender, we answer questions about this process every day. Call us: 9722039033.