What to Avoid During a Home Purchase

What's better than getting a bunch of new furnishings to go in your future home? Not much. But making big ticket purchases before closing can be a misstep. There are still a few major hurdles to jump before the keys are handed over. We have given you a list of actions below we suggest you stay away from when waiting for closing.

Don't buy big-ticket items. Although you may be listing ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. Using cash to purchase big-ticket items can even create an issue: most lending institutions look at your cash reserve when approving your application.

Don't look for a new career. Lending Institutions feel comfortable seeing a consistent career history on your paperwork. Finding a new job (especially one with a bigger paycheck) may not hinder your ability to qualify for your loan. However, getting a new career during your approval process may influence your approval.

Don't switch banks or move finances around in your bank accounts. Most lenders will require you to provide recent bank statements on your accounts: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most lending institutions want a detailed paper trail to verify the source of all incoming funds. No matter the reason, moving banks or transferring money can raise a red flag with the lender and impede your application process.

Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until the completion of the deal, any earnest money remains yours. Although your FSBO seller might not understand this, your good faith funds should be applied to your closing expenses. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the deal closes. The disposition of earnest funds, in the case of a failed transaction, should be indicated in the contract with your seller.

Metro Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 866-300-1550.