Things to Avoid While Buying a Home

Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. Until your keys are in hand, there are still some hoops to jump through. Here are some things to stay clear of during the home buying process to be sure the transaction goes well.

Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you buy your appliances on your credit cards in the middle of your loan process. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.

Don't go on a career search. Your recent career history should show consistency. Getting a new job may not compromise your ability to qualify for a loan - especially if you are improving your salary. But in some cases, changing jobs during the loan application process might bring concern and hinder your application.

Don't move money around or change banks. Most lenders will ask for recent bank statements of your accounts: checking, savings, money market, and other assets. To eliminate potential fraud, most loans require a detailed paper trail to determine the source of all incoming funds. Even for innocent purposes, transferring finances or changing banks could make it harder for your lending institution to document your bank history.

Don't give funds directly to your seller (usually in cases of "for sale by owner") for earnest money. Until the sale is complete, the good faith deposit actually belongs to you. Your seller may not know that the good faith funds is to go toward your expenses at closing. Get a lawyer or other neutral party who is able to hang on to the deposit or place it in a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be written in the contract with your seller.

Patricia Kotz can walk you through the pitfalls of getting a mortgage. Give us a call at 970-984-2766.