What to Avoid During a Home Purchase

Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. It's wise to remember that until you get the keys, your lender is watching you very closely. Here are some things to avoid during the home buying process to assure your transaction goes well.

Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. You may send up red flags with your lender if you buy new furniture on your credit cards during your loan process. Using cash to buy big items can also create a problem: many banks take into consideration your available cash when approving your mortgage loan.

Don't look for a new career. Lending Institutions look for a consistent work history on your application forms. Finding a new career (particularly one with a bigger salary) may not change your ability to qualify for your loan. However, switching careers in the middle of your approval process may affect whether or not you are approved.

Don't move finances around or switch banks. Bank statements from the last two or three months for all of your accounts (checking, savings, money market, and others) will probably be analyzed as the lending institution makes decisions regarding your approval. The lender needs to see a consistent flow of your money each pay period, in order to avoid fraud. Changing banks or moving funds to another account - no matter the reason - might make it harder for the lender to document your funds.

Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it remains yours until the transaction is final. The good faith money is to be used for your expenses closing; some sellers may not realize this. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until closing. If your transaction fails, the contract with the seller should specify to whom the good faith deposit should go.

Metro Mortgage can answer questions about these "Don'ts" and many others. Give us a call: 866-300-1550.

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