Things to Avoid While Buying a Home

Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves their loan. It's best to remember that until you get the keys, your lender is watching your accounts very closely. Here are some actions to refrain from during the home buying process to assure your transaction goes smoothly.

Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. Because lending institutions are perusing your bank accounts, a large cash purchase is also not advised.

Don't get a new job. Lenders like to see a consistent job history on your application. Changing jobs may not compromise your ability to qualify for a loan - especially if you are improving your salary. However, if you switch careers before you qualify, your loan process could fail or be bogged down.

Don't move finances around or change banks. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will likely be analyzed as the lender makes decisions regarding your approval. To avoid potential fraud, most loans need a detailed paper trail to verify the source of all cash. No matter the purpose, switching banks or transferring funds might raise a red flag with the lender and slow your qualification process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until closing, any good faith deposit actually belongs to you. Some FSBO sellers may not realize that your earnest money must be applied to your expenses upon closing. Find an attorney or other neutral person who will hold the funds or put them in a trust account until you close. The final disposition of earnest funds, if your sale falls through, should be indicated in the purchase agreement with the seller.

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