What to Avoid During a Home Purchase

Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves their loan. Until the keys are handed over, there still remain some hurdles to jump. We have given you a list of things below you will want to stay away from when waiting for your loan to close.

Don't buy big-ticket items. Although you will be dreaming of ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Using credit cards to buy new living room furniture could compromise your lending process by altering your numbers dramatically. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.

Don't go on a job search. Lending Institutions feel comfortable seeing a consistent job history on your application. Getting a new job may not affect your ability to qualify for a loan - particularly if you are going to be making more money. However, switching jobs in the middle of your application process could influence your approval.

Don't switch banks or move money around in your accounts. While your lender reviews your loan package, you will probably be required to produce bank statements for recent months for your checking and savings accounts, money market accounts and other liquid wealth. To eliminate potential fraud, most loans need thorough paperwork to determine the source of all cash. Changing banks or transferring finances to another account - even if its just to consolidate funds - might make it difficult for the lender to verify your funds.

Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Although your FSBO seller might not realize this, any earnest money should be used for your closing expenses. A neutral party, like an attorney can hang onto your deposit, or you may put it temporarily into a trust account until you close. Your contract should document who gets the money if the home purchase fails.

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