What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. Until closing, there are still some hoops to jump through. We have given you a list of things below you will want to avoid when waiting for closing.

Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until closing. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's even a mistake to make those large purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.

Don't go on a job search. Lending Institutions feel comfortable seeing a consistent job history on your application. Getting a new job before you start the application process for a loan may not affect your approval at all. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.

Don't switch banks or move money around in your bank accounts. While your lending institution reviews your mortgage loan application, you will likely be required to submit bank statements for recent months for your checking and savings accounts, money market funds and other liquid wealth. Your lending institution is looking for a consistent rise and fall of your funds over the pay period, in the interest of avoiding fraud. Changing banks or transferring funds elsewhere - even if its just to pool funds - may hinder the documentation of your funds.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith deposit actually belongs to you. Any earnest money is to be used for your expenses closing; your individual seller may not know this. Find an attorney or other neutral person who will hang on to the funds or place them in a trust account until closing. The disposition of earnest money, in the case of a failed transaction, should be specified in the contract with the seller.

At Southwest Funding #841, we answer questions about this process every day. Give us a call: (512) 291-6100.

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