Things to Avoid While Purchasing a Home

What's more fun than buying a bunch of new stuff to adorn your future home? Nothing. But making big ticket purchases before your loan closes could be trouble. Until the house is really yours, there still remain some hurdles to jump. Here are some things to stay clear of before closing to be sure the transaction goes well.

Don't overspend on big-ticket items It may be tempting to order that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making big ticket purchases like furniture, appliances, electronic equipment, or vacations until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. Using cash to buy expensive items can even create a mistake: most lending institutions look at your cash on hand when approving your application.

Don't go on a career search. Lenders feel comfortable seeing a consistent career history on your application forms. Finding a new job (especially one with a bigger salary) may not jeopardize your ability to qualify for a loan. However, if you switch careers before approval, your loan process could fail or be stalled.

Don't switch banks or move money around in your accounts. Bank statements from the last two or three months for your accounts (checking, savings, money market, and other accounts) will probably be studied as the lending institution makes decisions regarding your approval. To detect fraud, lenders will need clear documentation of how you earn your living and where any additional funds come from. No matter the reason, moving banks or moving funds from one account to another can raise a red flag with the lender and slow your approval process.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your earnest money does not belong to the seller: it remains yours until the sale closes. Your good faith funds are to be applied to your expenses upon closing; some individual sellers might not understand this. Get an attorney or other neutral party who is able to hang on to the funds or put them in a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be indicated in the contract with the seller.

At REDDISH BULL FINANCE, INC. | NMLS #1247892, we answer questions about this process every day. Give us a call: 561-475-2281.