What to Avoid During your Home Purchase

Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves their loan. Until your loan closes, there still remain some hoops to jump through. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.

Don't go on a job search. Stability in your career history is a positive thing to lenders. Getting a new job before you apply for a mortgage may not affect your approval at all. However, getting a new job in the middle of the application process may affect whether or not you are approved.

Don't change banks or move cash around in your bank accounts. As the lending institution considers your loan application, you will likely be required 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 loans want a detailed paper trail to determine the source of all funds. Switching banks or moving finances to another account - even if its merely to consolidate funds - could hinder the documentation of your funds.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not the seller until closing. Your FSBO seller may not realize that this good faith money should be applied to your expenses upon closing. Find a lawyer or other neutral party who is able to hold the money or put it in a trust account until you close. Your contract should document to whom the money goes if the transaction fails.

ADVISORY MORTGAGE can answer questions about these "Don'ts" and many others. Give us a call at 8102292820.