What to Avoid During your Home Purchase

What's better than buying a bunch of new furniture to adorn your future home? Not much. But making large purchases before your loan closes can be a mistake. Until your loan closes, there are still some hurdles to jump. Below you'll find a list of things to avoid during this crucial time of your home purchase.

Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from big purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Using cash to purchase big-ticket items can even be an issue: most lenders take into consideration your cash on hand when approving your application.

Don't get a new job. Your recent work history should show stability. Getting a new job before you start the application process for a mortgage may not compromise your approval at all. However, if you switch careers before your loan is approved, your process could fail or be bogged down.

Don't move cash around or change banks. As your lending institution reviews your mortgage loan package, you will probably be asked to produce bank statements for the last two or three months for your saving and checking accounts, money market accounts and other liquid wealth. The lender will need to see a steady flow of your funds over the pay period, in order to rule out fraud. No matter the reason, changing banks or moving funds from one account to another can raise a red flag with the lender and slow your qualification process.

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 up until the sale is final. Some FSBO sellers might not know that your good faith funds should go toward your expenses at closing. Find an attorney or other neutral party who is able to hang on to the deposit or put it in a trust account until you close. The disposition of good faith funds, if your home purchase fails, should be specified in the contract with your seller.

At ADVISORY MORTGAGE, we answer questions about this process every day. Give us a call at 8102292820.