What to Avoid During your Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until closing, there still remain some hoops to jump through. We have given you a list of actions below we suggest you stay away from when waiting for closing.

Don't empty your wallet on big-ticket items You may be itching to order that new Turkish rug for the soon-to-be-yours parlor, but it's best to stay away from making major purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. Your lender may send up red flags if you finance your furniture on your credit cards in the middle of your loan process. Using cash to purchase big items can also be a bad idea: most lenders consider your cash on hand when approving your loan.

Don't look for a new career. Lending Institutions like to see a consistent job history on your application forms. Getting a new career before you apply for a mortgage loan may not get in the way of your approval at all. However, switching careers in the middle of the loan process could affect your approval.

Don't move finances around or change banks. As the lender reviews your mortgage package, you will probably be required to provide bank statements for recent months on your checking and savings accounts, money market accounts and other liquid assets. Your lending institution looks for a consistent rise and fall of your money each month, in the interest of avoiding fraud. No matter the purpose, changing banks or transferring money might raise a red flag with your lender and impede your approval process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith money does not belong to the seller: it remains yours until closing. The earnest money is to be used for your expenses upon closing; some individual sellers may not understand this. An attorney or other type of neutral party can hold your earnest money, or you may put it temporarily into a trust account until you close. The final disposition of earnest money, if your transaction falls through, should be indicated in the purchase agreement with your seller.

At Metro Mortgage, we answer questions about this process every day. Call us: 866-300-1550.