Things to Avoid While Purchasing a Home

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 appliance store. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Here are some things to avoid before closing to be sure the transaction goes smoothly.

Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, cars, appliances, or vacations until your loan closes. Financing new Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to buy big items can even be a mistake: many lenders look at your available cash when approving your loan.

Don't get a new job. Consistency in your work history is a good thing to lending institutions. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, if you switch careers before your loan is approved, your process could fail or be stalled.

Don't move cash around or switch banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other accounts) will likely be studied as the lender makes decisions regarding your mortgage application. To avoid potential fraud, most lenders need a detailed paper trail to determine the source of all incoming funds. No matter the reason, switching banks or moving money from one account to another could raise a red flag with the lender and slow your application process.

Don't give money directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. Your earnest money does not belong to the seller: it remains yours until the transaction is final. Although your seller may not know this, the good faith funds must be applied to your closing expenses. Find an attorney or other neutral person who is able to hold the funds or put them in a trust account until closing. If your home purchase fails, your purchase agreement should dictate to whom the earnest money should go.

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