Things to Avoid While Buying a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't make expensive purchases. Although you will be dreaming of ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until your loan closes. Using plastic to buy furniture could compromise your loan process by distorting your numbers. Using cash to purchase expensive items can even create an issue: many lending institutions look at your available cash when approving your loan.

Don't go on a career search. Lenders look for a consistent job history on your application forms. Getting a new career before you apply for a loan may not get in the way of your approval at all. However, if you switch careers before approval, your process could fail or be stalled.

Don't move money around or change banks. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other assets) will likely be studied as the lender makes decisions regarding your loan application. The lending institution is looking for a steady flow of your funds each pay period, in order to avoid fraud. No matter the reason, changing banks or transferring money might raise a red flag with your lender and impede your approval process.

Don't give money directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your good faith deposit belongs to you, not the seller up until the deal closes. Some sellers might not realize that this good faith money must be applied to your expenses at closing. Get an attorney or other neutral party who will hold the funds or put them in a trust account until you close. The disposition of good faith funds, if your sale falls through, should be specified in the contract with your seller.

Not Your Average Lender can answer questions about these "Don'ts" and many others. Give us a call: 9722039033.