What to Avoid During a Home Purchase

What's better than getting a bunch of new furniture to go in your future home? Not much. But buying big ticket items before closing can be harmful. It's wise to remember that until closing, your lender is watching you very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't buy big-ticket 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 the loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. It's even a mistake to make those big-ticket purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.

Don't go on a career search. Lending Institutions look for a consistent job history on your application. Getting a new career before you start the application process for a loan may not affect your approval at all. But for some, changing careers during the mortgage loan approval process might bring concern and hinder your approval.

Don't take your accounts to a new bank or move around your finances. While your lender reviews your mortgage application, you will likely be instructed to provide bank statements for the last few months for your saving and checking accounts, money market funds and other liquid assets. Your lender is looking for a consistent rise and fall of your funds each month, in the interest of avoiding fraud. No matter the reason, moving banks or transferring money might raise a red flag with the lender and slow down your loan process.

Don't give cash directly to your seller (generally in cases of "for sale by owner") for a "good faith" deposit. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Although some individual sellers may not know this, the earnest money must be used for your closing expenses. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until closing. Should your home purchase fail, the contract with the seller should dictate where the earnest money should go.

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