What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves their loan. There still remain a few major hurdles to jump before your loan closes. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.

Don't buy luxury items. Although you may be dreaming of ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and car purchases until the closing of your loan. You may send up red flags with your lender if you finance your appliances on your credit cards during your loan process. Using cash to buy big items can even create a problem: many lending institutions take into consideration your cash on hand when approving your loan.

Don't look for a new career. Lenders feel comfortable seeing a consistent job history on your application forms. Finding a new job (particularly one with a bump in salary) may not hinder your ability to qualify for your mortgage. However, if you switch careers before approval, your mortgage process could fail or be bogged down.

Don't take your accounts to a new bank or move around your finances. Bank statements from the last few months for your accounts (savings, checking, money market, and other accounts) will be studied as the lending institution considers your mortgage application. To eliminate fraud, lenders require clear documentation of how you earn your living and where additional money comes from. Even for innocent purposes, transferring funds or switching banks may make it more difficult for your lender to confirm your bank history.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money belongs to you, not to the seller until the deal closes. Although your FSBO seller might not understand this, your good faith funds must go toward the buyer's 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 earnest money, if your home purchase falls through, should be specified in the purchase agreement with the seller.

REDDISH BULL FINANCE, INC. | NMLS #1247892 can walk you through the pitfalls of getting a mortgage. Give us a call at 561-475-2281.