What to Avoid During a Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. It's wise to remember that until closing, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.

Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and vehicle purchases until your loan closes. You may send up red flags with your lender if you buy your furniture on your credit cards in the middle of your loan process. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.

Don't look for a new career. Consistency in your work history is a good thing to banks and other lenders. Finding a new career (especially one with a better salary) may not hinder your ability to qualify for a loan. However, getting a new career during your loan process may influence whether or not you are approved.

Don't move money around or switch banks. As the lender considers your loan package, you will likely be instructed to submit bank statements for the last two or three months on your saving and checking accounts, money market accounts and other liquid finances. In order to detect fraud, lenders look for clear documentation of how you earn your money and where any additional money comes from. Switching banks or moving money to another account - no matter the purpose - might hinder the review of your accounts.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Although your FSBO seller may not understand this, your good faith money should be applied to your closing expenses. Get an attorney or other neutral party who will hold the funds or place them in a trust account until you close. The disposition of good faith funds, in the case of a failed transaction, should be indicated in the contract with the seller.

MortgageZ LLC can answer questions about these "Don'ts" and many others. Give us a call at 8557558700.