What to Avoid During your Home Purchase

Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves the loan. There still remain a few major hurdles to jump before the house is realy yours. Here are some actions to refrain from before closing to be sure your transaction goes well.

Don't buy luxury items. Although you may be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until your loan closes. Your lender may send up red flags if you purchase your appliances on your credit cards in the middle of your loan process. It's even a red flag to make those large purchases with cash. Lending Institutions are looking at your available cash when considering your loan.

Don't get a new career. Your recent job history should show consistency. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. However, getting a new job during your approval process may influence whether or not you are approved.

Don't switch banks or move money around in your accounts. As your lender considers your loan application, you will probably be instructed to produce bank statements for the last two or three months on your saving and checking accounts, money market accounts and other liquid assets. In order to avoid fraud, lenders look for clear documentation of how you earn your money and where any additional funds come from. Even for innocent reasons, moving around funds or switching banks may make it difficult for the lender to document your account history.

Don't give money directly to your seller (generally in the case of of "for sale by owner") to be used as earnest money. As a rule, your good faith deposit is yours, not the seller's until closing. The FSBO seller may not know that your earnest money must be used for your expenses upon closing. We recommend that you put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. The disposition of good faith funds, in the case of a failed transaction, should be included in the purchase agreement with your seller.

Metro Mortgage can answer questions about these "Don'ts" and many others. Call us: 866-300-1550.