What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Because lenders are reviewing your bank accounts, a large cash purchase is also a bad idea.

Don't get a new job. Your recent career history should show consistency. Getting a new job may not compromise your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. However, if you switch careers before approval, your loan process could fail or be stalled.

Don't move money around or change banks. Bank statements from the last few months for your accounts (checking, savings, money market, and other assets) will be analyzed as the lender makes decisions regarding your approval. Your lender hopes to see a steady flow of your funds each month, in the interest of ruling out fraud. Even for innocent purposes, moving around cash or changing banks might make it more difficult for your lending institution to verify your account history.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller up until the deal closes. Some sellers might not realize that your good faith funds is to be applied to your expenses at closing. It's advisable to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. If your transaction fails, your purchase agreement should specify to whom this good faith deposit should go.

Tier One Mortgage, LLC can answer questions about these "Don'ts" and many others. Give us a call: (585) 282-0960.