What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves the loan. Until closing, there are still some hoops to jump through. Here are some things to stay clear of during the home buying process to be sure the transaction goes smoothly.

Don't empty your wallet on big-ticket items It may be tempting to buy that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or vacations until your home loan closes. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase expensive items can also create a bad idea: many lending institutions look at your cash on hand when approving your application.

Don't look for a new career. Your recent work history should show stability. Finding a new career (particularly one with a better paycheck) may not change your ability to qualify for a loan. However, if you switch careers before approval, your loan process could fail or be stalled.

Don't switch banks or move finances around in your accounts. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will probably be studied as the lender considers your loan application. To eliminate potential fraud, most loans require detailed paperwork to determine the source of all cash. No matter the purpose, changing banks or moving money from one account to another could raise a red flag with your lender and slow your application process.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit remains yours. Any earnest funds are to go toward your expenses closing; some individual sellers might not know this. Get an attorney or other neutral party who is able to hang on to the funds or place them in a trust account until closing. The final disposition of earnest money, in the case of a failed transaction, should be specified in the purchase agreement with your seller.

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Company NMLS # 303440 can answer questions about these "Don'ts" and many others. Give us a call: 5122916100.