Things to Avoid While Buying a Home

Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Until your loan closes, there are still some hurdles to jump. Here are some actions to refrain from during the home buying process to be sure the transaction goes smoothly.

Don't overspend on big-ticket items It may be tempting to buy that new Turkish rug for the soon-to-be-yours living room, but it's advisable to stay away from making big ticket purchases like furniture, appliances, electronic equipment, or cars until closing. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lenders are perusing your bank accounts, a large cash purchase is also not advised.

Don't look for a new career. Lending Institutions like to see a consistent job history on your paperwork. Finding a new career (especially one with a better paycheck) may not change your ability to qualify for a mortgage. However, if you switch careers before approval, your mortgage process could fail or be bogged down.

Don't switch your accounts to a new bank or move around your finances. Bank statements from recent months for all of your accounts (savings, checking, money market, and other assets) will be studied as the lender considers your approval. To avoid potential fraud, most lenders need detailed paperwork to document the source of all incoming funds. No matter the purpose, changing banks or transferring money can raise a red flag with your lender and slow your approval process.

Don't give 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. Although some FSBO sellers might not know this, any good faith money should go toward the buyer's closing expenses. An attorney or other type of neutral party can hang onto your funds, or you may put them temporarily into a trust account until you close. The final disposition of good faith funds, if your home purchase falls through, should be included in the purchase agreement with your seller.

U.S.A. Lending, Inc. can answer questions about these "Don'ts" and many others. Call us at 305-967-7200.