What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves their loan. There are still a few major hurdles to jump before closing. We have listed some actions below we suggest you avoid when waiting for closing.

Don't buy big-ticket items. Although you may be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and vehicle purchases until your loan closes. Financing new stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy big-ticket items can also be an issue: many banks consider your available cash when approving your loan.

Don't go on a job search. Lenders feel comfortable seeing a consistent career history on your paperwork. Finding a new job (particularly one with a better salary) may not hinder your ability to qualify for a mortgage. However, if you switch careers before you qualify, your mortgage process could fail or be bogged down.

Don't switch banks or move finances around in your accounts. As your lender reviews your loan package, you will likely be instructed to produce bank statements for recent months for your checking accounts, savings accounts, money market accounts and other liquid assets. To avoid potential fraud, most loans want a thorough paper trail to document the source of all cash. Switching banks or transferring finances elsewhere - for whatever purpose - might hinder the review of your funds.

Don't give money directly to your seller (commonly in cases of "for sale by owner") to be used as a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. A FSBO seller might not know that the good faith money should go toward your expenses at closing. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until you close. If your transaction fails, the contract with the seller should specify where the earnest money should go.

At Tenby J. Dahman The Dahman Team , we answer questions about this process every day. Give us a call at 3038627760.