Things to Avoid While Purchasing a New Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. There still remain a few major hurdles to jump before closing. Here are some actions to refrain from before closing to assure your transaction goes smoothly.

Don't empty your wallet on big-ticket items It may be tempting to order that new Turkish rug for the soon-to-be-yours living room, but it's best to avoid making large purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Since lenders are examining your bank accounts, a large cash purchase is also a mistake.

Don't look for a new career. Consistency in your job history is a good thing to banks and other lenders. Getting a new career before you apply for a loan may not compromise your approval at all. However, switching careers during your approval process may affect your approval.

Don't move money around or change banks. Your lender will ask for recent bank statements for accounts in your name: savings, checking, money market, and other assets. In order to eliminate fraud, lenders will need a clear and consistent picture of how you earn your money and where additional wealth comes from. Switching banks or moving finances elsewhere - for whatever reason - could make it difficult for the lender to review your funds.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the sale closes. Your good faith funds are to go toward your expenses closing; some FSBO sellers may not know this. We recommend that you put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until closing. The final disposition of earnest money, in the case of a failed transaction, should be specified in the contract with your seller.

At Patricia Kotz, we answer questions about this process every day. Call us at 970-984-2766.

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