What to Avoid During your Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Until your loan closes, there are still some hurdles to jump. Here are some things to refrain from before closing to assure your transaction goes smoothly.

Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using credit cards to buy new living room furniture could compromise your lending process by altering your numbers dramatically. Using cash to buy big items can also be a problem: most lending institutions take into consideration your available cash when approving your loan.

Don't look for a new career. Consistency in your job history is a positive thing to lenders. Getting a new career before you start the application process for a mortgage loan may not compromise your approval at all. However, if you switch careers before you qualify, your loan process could fail or be bogged down.

Don't move cash around or change banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will be analyzed as the lender makes decisions regarding your application. To detect potential fraud, most loans want detailed paperwork to verify the source of all cash. No matter the purpose, switching banks or transferring funds may raise a red flag with the lender and slow your loan process.

Don't give money directly to your seller (usually in cases of "for sale by owner") for earnest money. Your good faith money does not belong to the seller: it is actually yours until closing. Any earnest money is to be used for your expenses upon closing; some FSBO sellers might not understand this. Find a lawyer or other neutral person who will hang on to the money or place it in a trust account until closing. Your purchase agreement should indicate where the money goes if the transaction does not go through.

Not Your Average Lender can walk you through the pitfalls of getting a mortgage. Call us: 9722039033.