What to Avoid During your Home Purchase

Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves the loan. Keep in mind that until closing, your lender is watching you very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. Financing new Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's even a mistake to make those huge purchases with cash. Lenders are looking at your cash on hand when considering your loan.

Don't go on a career search. Your recent job history should show consistency. Getting a new career before you apply for a loan may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.

Don't switch your accounts to a new bank or move around your finances. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and others) will be analyzed as the lender considers your approval. In order to avoid fraud, lenders need a clear and consistent picture of how you earn your money and where any additional wealth comes from. Even for practical reasons, transferring funds or switching banks may make it harder for your lending institution to verify your account history.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith deposit is yours, not the seller's until closing. A FSBO seller might not realize that this good faith money must be used for your expenses at closing. Get a lawyer or other neutral party who is able to hold the funds or put them in a trust account until you close. Your purchase agreement should specify who keeps the earnest funds if the home purchase falls through.

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