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 loan is approved. Until the keys are handed over, there still remain some hurdles to jump. Here are some things to avoid during the home buying process to be sure the transaction goes well.

Don't overspend on big-ticket items Although you will be planning ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using plastic to buy furniture could jeopardize your lending process by altering your numbers dramatically. It's also a bad idea to make those big purchases with cash. Lenders are looking at your cash reserve when considering your loan.

Don't look for a new career. Lending Institutions look for a consistent job history on your paperwork. Finding a new job (particularly one with a better salary) may not change your ability to qualify for a mortgage loan. But in some cases, changing jobs during the mortgage loan approval process might bring concern and stymie your application.

Don't switch your accounts to a new bank or move around your money. As the lender reviews your loan application, you will likely be instructed to submit bank statements for the last few months for your saving and checking accounts, money market funds and other liquid wealth. To avoid potential fraud, most lending institutions require a thorough paper trail to verify the source of all incoming funds. Changing banks or moving finances elsewhere - no matter the reason - might make it harder for your lender to verify your funds.

Don't give money directly to your seller (usually in the case of of "for sale by owner") for earnest money. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Your earnest funds are to go toward your expenses closing; some individual sellers might not know this. Get a lawyer or other neutral party who will hold the money or place it in a trust account until you close. Your contract should dictate where the money goes if the transaction fails.

Patricia Kotz can answer questions about these "Don'ts" and many others. Give us a call at 970-984-2766.