What to Avoid During your Home Purchase

What's better than buying a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until the keys are handed over, there are still some hoops to jump through. We have listed some actions below we suggest you stay away from when waiting for your loan to close.

Don't make expensive purchases. You may be itching to buy that new couch for the soon-to-be-yours den, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your lender may send up red flags if you finance new electronics on your credit cards during your loan process. It's also a mistake to make those big purchases using cash. Lenders are looking at your cash reserve when considering your loan.

Don't get a new job. Lenders feel comfortable seeing a consistent work history on your application forms. Changing jobs may not affect your ability to qualify for a loan - particularly if you are improving your salary. However, switching careers in the middle of your approval process may affect your approval.

Don't switch your accounts to a new bank or move around your cash. Bank statements from the last few months for all of your accounts (checking, savings, money market, and other assets) will probably be analyzed as the lending institution considers your loan application. To eliminate potential fraud, most lenders want thorough paperwork to document the source of all incoming funds. Even for innocent reasons, moving around funds or changing banks might make it difficult for your lender to confirm your account history.

Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Although some individual sellers might not understand this, the earnest money must go toward the buyer's closing expenses. A neutral party, like an attorney can hold your funds, or you may put them temporarily into a trust account until you close. Should your sale fall through, your contract with the seller should document where the earnest money should go.

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