Things to Avoid While Buying a Home

What's more fun than buying a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before your loan closes can be a misstep. Until closing, there still remain some hoops to jump through. Below you'll find a list of actions to avoid during this critical time of your home purchase.

Don't throw your money around. You may be tempted to buy that new couch for the soon-to-be-yours living room, but it's advisable to stay away from making major buys like furniture, appliances, jewelry, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a bad idea to make those big purchases using cash. Lenders are examining your cash on hand when considering your loan.

Don't go on a career search. Your recent job history should show stability. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are going to be making more money. But for some, changing careers during the mortgage approval process may bring concern and stymie your application.

Don't change banks or move finances around in your accounts. As the lending institution reviews your loan application, you will likely be required to provide bank statements for the last few months on your saving and checking accounts, money market accounts and other liquid assets. To detect fraud, lenders need a consistent portrayal of how you earn your money and where any additional wealth comes from. No matter the reason, changing banks or moving funds from one account to another can raise a red flag with the lender and slow down your application process.

Don't give money directly to your seller (commonly in cases of "for sale by owner") for a "good faith" deposit. Until the sale is complete, the earnest money actually belongs to you. Although your seller may not realize this, the good faith money must be used for your closing expenses. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until you close. Should your sale fall through, your contract with the seller should indicate where the good faith funds should go.

At Bob Rutledge Mortgage, we answer questions about this process every day. Give us a call at 3149139678.