What to Avoid During your Home Purchase

What's more fun than buying a bunch of new furnishings to go in your future home? Not much. But buying big ticket items before your loan closes can be harmful. There still remain a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to stay away from during this critical time of your home purchase.

Don't buy luxury items. It may be tempting to buy that new couch for the soon-to-be-yours den, but it's best to stay away from making big ticket purchases like furniture, appliances, jewelry, or cars until your home loan closes. Your lender may send up red flags if you finance new furniture on your credit cards during your loan process. Using cash to purchase big items can also create a bad idea: many lenders look at your cash on hand when approving your application.

Don't get a new job. Lenders feel comfortable seeing a consistent career history on your application forms. Getting a new job before you start the application process for a mortgage loan may not affect your approval at all. But in some cases, changing careers during the mortgage approval process could bring concern and stymie your application.

Don't move cash around or switch banks. Bank statements from the last few months for your accounts (savings, checking, money market, and others) will likely be reviewed as the lender makes decisions regarding your mortgage application. To eliminate potential fraud, most lenders require thorough paperwork to verify the source of all incoming funds. Switching banks or moving funds elsewhere - no matter the purpose - might make it difficult for your lender to review your funds.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the sale is complete, the earnest money actually belongs to you. Although your FSBO seller may not know this, the good faith funds should be applied to the buyer's closing expenses. Find an attorney or other neutral party who can hang on to the funds or place them in a trust account until you close. The final disposition of good faith money, in the case of a failed transaction, should be written in the contract with the seller.

Tenby J. Dahman The Dahman Team can answer questions about these "Don'ts" and many others. Give us a call at 3038627760.