What to Avoid During your Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until your loan closes, there are still some hurdles to jump. Below you'll find a list of things to avoid during this crucial time of your home purchase.

Don't throw your money around. You may be tempted to buy that new easy-chair for the soon-to-be-yours parlor, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to buy big-ticket items can even create an issue: many banks look at your available cash when approving your mortgage loan.

Don't look for a new career. Consistency in your job history is a positive thing to banks and other lenders. Getting a new career before you start the application process for a mortgage loan may not affect your approval at all. However, switching careers in the middle of the approval process may affect whether or not you are approved.

Don't switch banks or move cash around in your bank accounts. Your lending institution will require you to submit recent bank statements on accounts in your name: checking, savings, money market, and other assets. To eliminate potential fraud, most lenders want a thorough paper trail to document the source of all incoming funds. Even for practical purposes, moving around funds or switching banks could make it more difficult 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 money is yours, not the seller's until the sale is final. Although your seller might not understand this, any earnest money should go toward your closing expenses. It's advisable to put the funds into a trust account, or get an attorney to hold them until closing. The contract should dictate who gets the earnest funds if the home purchase falls through.

Tier One Mortgage, LLC can answer questions about these "Don'ts" and many others. Give us a call: 5852820960.