Things to Avoid While Buying a Home

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. It's best to remember that until your keys are in hand, your lender is watching your accounts very closely. Here are some actions to avoid before closing to assure your transaction goes well.

Don't buy big-ticket items. Although you will be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and vehicle purchases until your loan closes. Your lender may send up red flags if you purchase new furniture on your credit cards during your loan process. Because lending institutions are perusing your bank accounts, a large cash purchase is also not advised.

Don't look for a new career. Your recent career history should show stability. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, finding a new job in the middle of your loan process may affect your approval.

Don't move finances around or change banks. While the lending institution reviews your mortgage package, you will probably be asked to provide bank statements for recent months for your saving and checking accounts, money market funds and other liquid wealth. Your lending institution looks for a steady flow of your money over the pay period, in the interest of avoiding fraud. Switching banks or moving funds elsewhere - for whatever reason - could make it harder for the lender to document your funds.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not to the seller until the sale is final. The earnest money is to be used for your expenses upon closing; a individual seller might not know this. Get a lawyer or other neutral party who is able to hang on to the deposit or put it in a trust account until closing. The final disposition of earnest funds, if your home purchase fails, should be written in the purchase agreement with your seller.

At U.S.A. Lending, Inc., we answer questions about this process every day. Give us a call: 305-967-7200.