What to Avoid During your Home Purchase

What's more fun than getting a bunch of new furnishings to go in your future home? Not much. But making large purchases before closing could be trouble. There are still a few major hurdles to jump before your loan closes. Here are some actions to refrain from before closing to assure the transaction goes well.

Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new home into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using plastic to buy new living room furniture could compromise your loan process by distorting your numbers. It's also a bad idea to make those big purchases with cash. Lending Institutions are looking at your cash reserve when considering your loan.

Don't look for a new career. Stability in your work history is a positive thing to lending institutions. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, if you switch careers before you qualify, your mortgage process could fail or be bogged down.

Don't move finances around or switch banks. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will be analyzed as the lending institution considers your mortgage application. To detect potential fraud, most loans want a thorough paper trail to document the source of all funds. No matter the reason, switching banks or moving money from one account to another could raise a red flag with your lender and slow your loan process.

Don't give cash directly to your seller (commonly in cases of "for sale by owner") for a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. The earnest money is to go toward your expenses upon closing; some FSBO sellers might not understand this. We recommend that you put the money into a trust account, or get an attorney to hold it until the deal closes. The disposition of earnest money, if your transaction falls through, should be specified in the purchase agreement with the seller.

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