What to Avoid During a Home Purchase

Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. It's wise to remember that until closing, your lender is watching your accounts very closely. We have listed some actions below you will want to avoid when waiting for your loan to close.

Don't make expensive purchases. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. You may send up red flags with your lender if you purchase new appliances on your credit cards during your loan process. Because lending institutions are reviewing your bank accounts, a large cash purchase is also a bad idea.

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 better salary) may not affect your ability to qualify for a mortgage. However, finding a new job in the middle of your application process may affect your approval.

Don't move cash around or switch banks. Bank statements from the last few months for your accounts (savings, checking, money market, and other assets) will be analyzed as the lending institution makes decisions regarding your approval. To detect fraud, lenders look for clear documentation of how you earn your living and where additional funds come from. Even for innocent purposes, transferring funds or changing banks could make it more difficult for your lending institution to verify your account history.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not to the seller until the deal closes. Any earnest funds are to be used for your expenses closing; some sellers may not know this. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the deal closes. The final disposition of good faith money, in the case of a failed transaction, should be written in the contract with your seller.

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