Things to Avoid While Buying a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't buy 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, jewelry, appliances, or vacations until the loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's also a bad idea to make those large purchases with cash. Lenders are examining your cash on hand when considering your loan.

Don't get a new job. Lending Institutions feel comfortable seeing a consistent career history on your paperwork. Getting a new job before you start the application process for a loan may not jeopardize your approval at all. However, switching jobs in the middle of the application process could influence your approval.

Don't switch your accounts to a new bank or move around your money. Most lenders will require you to submit recent bank statements on accounts in your name: savings, checking, money market, and other assets. The lending institution looks for a consistent flow of your money each pay period, in order to avoid fraud. Even for practical reasons, moving around funds or switching banks could make it harder for your lending institution to confirm your account history.

Don't give funds directly to your seller (commonly in the case of of "for sale by owner") to be used as earnest money. Until closing, any earnest money actually belongs to you. The FSBO seller may not realize that the earnest money should be applied to your expenses upon closing. You'll need to put the money into a trust account, or get an attorney to hold it until the deal closes. Your purchase agreement should specify where the deposit goes if the transaction falls through.

At Tier One Mortgage, LLC, we answer questions about this process every day. Give us a call: (585) 282-0960.