Things to Avoid While Purchasing a Home

What's better than getting a bunch of new stuff to adorn your future home? Not much. But making big purchases before closing can be a misstep. Until the house is really yours, there still remain some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until the loan closes. Using credit cards to buy furniture could compromise your lending process by distorting your numbers. Since lenders are looking closely at your financial accounts, a large cash purchase is also not advised.

Don't look for a new job. Your recent work history should show consistency. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are getting a better salary. However, if you switch careers before you qualify, your loan process could fail or be stalled.

Don't take your accounts to a new bank or move around your cash. As the lending institution reviews your mortgage loan application, you will likely be required to produce bank statements for the last few months on your checking accounts, savings accounts, money market accounts and other liquid wealth. Your lender looks for a consistent rise and fall of your money each month, in the interest of ruling out fraud. Switching banks or moving finances elsewhere - for whatever purpose - might hinder the review of your funds.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller until closing. Although your FSBO seller may not realize this, the earnest money should be used for your closing expenses. Get an attorney or other neutral person who will hold the funds or place them in a trust account until you close. Should your sale fall through, the contract with the seller should document where the good faith deposit should go.

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