Things to Avoid While Purchasing a Home

Many 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. Until the house is really yours, there are still some hurdles to jump. Below you'll find a list of things to stay away from during this critical time of your home purchase.

Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. Using credit cards to buy new living room furniture could jeopardize your loan process by altering your numbers dramatically. Because lenders are looking closely at your bank accounts, a large cash purchase is also not advised.

Don't go on a job search. Your recent job history should show stability. Finding a new job (particularly one with a better paycheck) may not hinder your ability to qualify for a loan. But in some cases, changing jobs during the mortgage loan approval process might raise concern and hinder your application.

Don't move money around or switch banks. While your lending institution considers your loan application, you will likely be required to provide bank statements for recent months on your checking accounts, savings accounts, money market funds and other liquid finances. To detect potential fraud, most lenders want a thorough paper trail to determine the source of all funds. Even for innocent purposes, transferring money or switching banks may make it harder for the lender to document your account history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit belongs to you, not the seller up until closing. Although your FSBO seller may not know this, the good faith funds must be applied to your closing expenses. You'll want to put the money into a trust account, or get an attorney to hold it until the closing of the sale. The disposition of good faith money, in the case of a failed transaction, should be written in the purchase agreement with the seller.

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

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