What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. Until the keys are handed over, there still remain some hurdles to jump. We have given you a list of actions below you will want to stay away from when waiting for your loan to close.

Don't empty your wallet on big-ticket items It may be tempting to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or vacations until closing. You may send up red flags with your lender if you buy new electronics on your credit cards in the middle of your loan process. It's even a bad idea to make those big-ticket purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.

Don't get a new career. Your recent job history should show stability. Finding a new job (especially one with a bigger salary) may not affect your ability to qualify for a mortgage. However, if you switch careers before your loan is approved, your process could fail or be slowed down.

Don't move cash around or change banks. As the lender reviews your loan application, you will likely be asked to produce bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid assets. In order to detect fraud, lenders will need a clear and consistent picture of how you earn your money and where any additional wealth comes from. Even for practical reasons, transferring funds or switching banks could make it more difficult for the lending institution to verify your bank history.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any good faith money remains yours. Some FSBO sellers may not know that the good faith money must be used for your expenses at closing. It's advisable to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. The purchase agreement should document where the deposit goes if the home purchase does not go through.

At Not Your Average Lender, we answer questions about this process every day. Give us a call at 9722039033.