Things to Avoid While Purchasing a Home

Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the lender approves the loan. Keep in mind 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 You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until closing. You may send up red flags with your lender if you purchase new electronics on your credit cards during your loan process. Using cash to purchase expensive items can also be an issue: most lending institutions take into consideration your cash reserve when approving your loan.

Don't look for a new career. Lending Institutions look for a consistent job history on your application forms. Finding a new job (especially one with a bump in salary) may not affect your ability to qualify for a mortgage. However, getting a new career in the middle of your loan process may affect whether or not you are approved.

Don't switch your accounts to a new bank or move around your money. As your lender reviews your mortgage application, you will probably be required to produce bank statements for recent months on your checking and savings accounts, money market funds and other liquid assets. To eliminate fraud, lenders want to see clear documentation of how you earn your money and where any additional money comes from. Changing banks or moving finances to another account - even if its just to consolidate funds - could make it difficult for the lender to verify your funds.

Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be considered earnest money. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Some sellers may not know that your earnest money should be applied to your expenses upon closing. Get a lawyer or other neutral party who can hang on to the funds or place them in a trust account until closing. The final disposition of good faith funds, in the case of a failed transaction, should be written in the contract with your seller.

At ADVISORY MORTGAGE, we answer questions about this process every day. Call us: 8102292820.