What to Avoid During your Home Purchase

Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. It's best to remember that until closing, your lender is watching your accounts very closely. Below you'll find a list of actions to stay away from during this critical time of your home purchase.

Don't make expensive purchases. You may be itching to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to stay away from making big ticket buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Because lenders are looking closely at your bank accounts, a large cash purchase is also not advised.

Don't go on a job search. Your recent job history should show consistency. Finding a new career (particularly one with a better paycheck) may not hinder your ability to qualify for a loan. But for some, changing careers during the loan application process may bring concern and affect your approval.

Don't move money around or change banks. As your lender considers your mortgage package, you will likely be asked to produce bank statements for the last two or three months for your saving and checking accounts, money market funds and other liquid wealth. Your lending institution looks for a steady rise and fall of your money over the month, in the interest of ruling out fraud. Even for innocent reasons, moving around cash or changing banks might make it more difficult for your lender to document your account history.

Don't give money directly to your seller (usually in cases of "for sale by owner") for earnest money. Until closing, the good faith deposit actually belongs to you. Although your seller might not realize this, any good faith funds should be applied to the buyer's closing expenses. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. The disposition of earnest funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.

U.S.A. Lending, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call at 305-967-7200.