What to Avoid During a Home Purchase

What's better than getting a bunch of new furniture to go in your future home? Not much. But buying big ticket items before your loan closes could be trouble. There are still a few major hurdles to jump before closing. Here are some actions to avoid before closing to assure the transaction goes smoothly.

Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.

Don't get a new career. Consistency in your job history is a positive thing to banks and other lenders. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are going to be making more money. But for some, getting a new career during the mortgage loan application process may bring concern and hinder your application.

Don't switch your accounts to a new bank or move around your cash. Bank statements from the last two or three months for all of your accounts (checking, savings, money market, and other assets) will likely be studied as the lending institution makes decisions regarding your mortgage application. To detect potential fraud, most lending institutions want a thorough paper trail to determine the source of all incoming funds. Switching banks or transferring money to another account - for whatever purpose - might hinder the review of your funds.

Don't give funds directly to your seller (usually in the case of of "for sale by owner") for earnest money. As a rule, your good faith money is yours, not the seller's until the deal closes. Some sellers may not know that the good faith money should go toward your expenses at closing. Get an attorney or other neutral person who will hang on to the money or place it in a trust account until closing. Your purchase agreement should indicate to whom the funds go if the transaction falls through.

Bob Rutledge Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 3149139678.