What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. It's best to remember that until closing, your lender is watching you very closely. Here are some actions to refrain from during the home buying process to be sure the transaction goes well.

Don't buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you purchase your electronics on your credit cards in the middle of your loan process. Because lending institutions are looking closely at your financial accounts, a large cash purchase is also a mistake.

Don't go on a job search. Your recent job history should show stability. Getting a new job before you apply for a mortgage may not jeopardize your approval at all. But in some cases, changing careers during the mortgage application process might raise concern and hinder your application.

Don't switch banks or move cash around in your accounts. While the lender considers your loan package, you will likely be asked to provide bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid wealth. To avoid fraud, lenders will need clear documentation of how you earn your money and where any additional wealth comes from. Even for innocent purposes, transferring money or changing banks could make it more difficult for your lending institution to document your account history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your earnest money does not belong to the seller: it remains yours until the sale closes. Your seller may not realize that the good faith funds is to be used for your expenses at closing. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until closing. The final disposition of good faith funds, in the case of a failed transaction, should be specified in the contract with the seller.

At 24-7 Mortgage Loans, we answer questions about this process every day. Call us at 5107573659.

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