What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. There are still a few major hurdles to jump before closing. Here are some things to refrain from during the home buying process to be sure the transaction goes well.

Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy furniture could jeopardize your loan process by changing your numbers dramatically. Using cash to buy big-ticket items can also be a bad idea: most banks look at your available cash when approving your loan.

Don't get a new career. Your recent career history should show consistency. Finding a new career (especially one with a bump in salary) may not affect your ability to qualify for your mortgage. However, getting a new career in the middle of the loan process might affect your approval.

Don't take your accounts to a new bank or move around your finances. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will be analyzed as the lending institution makes decisions regarding your mortgage application. To eliminate potential fraud, most lenders want a detailed paper trail to verify the source of all incoming funds. No matter the reason, changing banks or moving funds from one account to another might raise a red flag with the lender and slow your qualification process.

Don't deliver 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 the seller until the deal closes. Although your seller might not understand this, your earnest money must be applied to the buyer's closing expenses. You'll want to put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. If your sale falls through, your purchase agreement should specify to whom your good faith deposit should go.

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