What to Avoid During a Home Purchase

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until your loan closes, there still remain some hurdles to jump. Below you'll find a list of things to stay away from during this crucial time of your home purchase.

Don't throw your money around. You may be itching to order that new sofa for the soon-to-be-yours den, but it's advisable to avoid making major purchases like furniture, appliances, jewelry, or vacations until closing. Using plastic to buy furniture could compromise your lending process by distorting your numbers. It's even a bad idea to make those large purchases with cash. Lending Institutions are looking at your cash reserve when considering your loan.

Don't get a new career. Your recent work history should show stability. Getting a new career before you start the application process for a mortgage loan may not get in the way of your approval at all. But for some, changing jobs during the mortgage application process could raise concern and hinder your application.

Don't take your accounts to a new bank or move around your finances. While your lender reviews your loan package, you will likely be asked to submit bank statements for recent months for your checking accounts, savings accounts, money market funds and other liquid wealth. The lending institution looks for a consistent flow of your money over the pay period, in order to rule out fraud. No matter the purpose, changing banks or transferring funds may raise a red flag with the lender and impede your qualification process.

Don't give cash directly to your seller (commonly in the case of of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it remains yours until closing. Your good faith funds are to be applied to your expenses upon closing; some sellers may not realize this. It's advisable to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. Should your sale fall through, your purchase agreement should specify to whom this earnest money should go.

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