Things to Avoid While Buying a Home

What's more fun than getting a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. It's best to remember that until closing, your lender is watching you very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't buy big-ticket items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Since lenders are perusing your financial accounts, a large cash purchase is also not advised.

Don't go on a career search. Stability in your career history is a positive thing to lenders. Getting a new job before you apply for a mortgage may not compromise your approval at all. However, if you switch careers before approval, your process could fail or be bogged down.

Don't change banks or move cash around in your accounts. Your lender will instruct the submission of recent bank statements of accounts in your name: checking, savings, money market, and other liquid assets. In order to avoid fraud, lenders need a clear and consistent picture of how you earn your money and where additional money comes from. No matter the purpose, changing banks or moving funds from one account to another may raise a red flag with your lender and slow your qualification process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until the completion of the deal, any good faith money actually belongs to you. Although your seller may not understand this, the earnest money must go toward your closing expenses. An attorney or other type of neutral party can hang onto your earnest funds, or you may place them temporarily into a trust account until you close. Your purchase contract should indicate to whom the deposit goes if the home purchase does not go through.

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