What to Avoid During your Home Purchase

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before closing. Here are some things to stay clear of during the home buying process to assure the transaction goes well.

Don't buy big-ticket items. It may be tempting to order that new sofa for the soon-to-be-yours parlor, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or cars until your home 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. It's also a bad idea to make those huge purchases with cash. Lenders are looking at your available cash when considering your loan.

Don't get a new career. Consistency in your work history is a positive thing to lending institutions. Getting a new job before you apply for a mortgage may not jeopardize your approval at all. But for some people, changing jobs during the loan approval process might raise concern and stymie your application.

Don't move money around or switch banks. While your lender considers your loan package, you will probably be asked to produce bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid finances. To detect potential fraud, most lenders need a thorough paper trail to document the source of all cash. Changing banks or moving funds to another account - no matter the purpose - might make it harder for the lender to verify your funds.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your good faith deposit belongs to you, not to the seller until the deal closes. Although your seller might not understand this, the good faith money must be used for the buyer's closing expenses. Get an attorney or other neutral person who is able to hang on to the money or put it in a trust account until you close. The final disposition of earnest money, if your transaction fails, should be included in the purchase agreement with your seller.

Tenby J. Dahman The Dahman Team can answer questions about these "Don'ts" and many others. Call us: 3038627760.