What to Avoid During a Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Keep in mind that until closing, your lender is watching your accounts very closely. We have listed some things below we suggest you avoid when waiting for your loan to close.

Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Using plastic to buy furniture could compromise your loan process by altering your numbers dramatically. Using cash to purchase big items can even create a mistake: most lenders look at your cash reserve when approving your loan.

Don't go on a career search. Lenders look for a consistent work history on your application. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.

Don't move finances around or change banks. Your lender will instruct the submission of recent bank statements for accounts in your name: checking, savings, money market, and other assets. The lending institution is looking for a steady rise and fall of your funds each month, in the interest of ruling out fraud. No matter the purpose, switching banks or transferring money may raise a red flag with the lender and slow your qualification process.

Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be considered a "good faith" deposit. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Although some FSBO sellers may not know this, your earnest money must be applied to the buyer's closing expenses. An attorney or other type of neutral party can hold your funds, or you may place them temporarily into a trust account until closing. Your contract should specify who gets the earnest funds if the home purchase fails.

At Executive Lending Group, we answer questions about this process every day. Give us a call: 4056158543.

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