What to Avoid During a Home Purchase

What's better than buying a bunch of new furniture to go in your future home? Nothing. But making big ticket purchases before closing could be trouble. There still remain a few major hurdles to jump before your loan closes. We have given you a list of things below we suggest you avoid when waiting for your loan to close.

Don't make expensive purchases. You may be itching to order that new couch for the soon-to-be-yours living room, but it's advisable to avoid making large purchases like furniture, appliances, electronic equipment, or cars until closing. Your lender may send up red flags if you purchase new appliances on your credit cards in the middle of your loan process. It's even a red flag to make those large purchases with cash. Lenders are looking at your available cash when considering your loan.

Don't get a new career. Stability in your work history is a positive thing to lending institutions. Getting a new job before you apply for a mortgage may not jeopardize your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.

Don't switch banks or move money around in your bank accounts. Bank statements from the last few months for accounts in your name (savings, checking, money market, and others) will likely be analyzed as the lender makes decisions regarding your application. To avoid potential fraud, most lending institutions need a detailed paper trail to document the source of all cash. Even for practical purposes, moving around cash or switching banks might make it harder for your lender to verify your account history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith deposit belongs to you, not to the seller until closing. Your earnest money is to go toward your expenses closing; some sellers may not understand this. An attorney or other type of neutral party can hold onto your earnest funds, or you may place them temporarily into a trust account until closing. If your sale falls through, the contract with the seller should indicate where your earnest money should go.

At Tier One Mortgage, LLC, we answer questions about this process every day. Give us a call: 5852820960.