What to Avoid During a 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. Keep in mind that until closing, your lender is watching your finances very closely. We have listed some things below you will want to avoid when waiting for your loan to close.

Don't throw your money around. You may be itching to order that new Turkish rug for the soon-to-be-yours living room, but it's best to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until your home loan closes. Using plastic to buy furniture could compromise your loan process by distorting your numbers. It's also a mistake to make those large purchases with cash. Lending Institutions are looking at your available cash when considering your loan.

Don't go on a career search. Your recent work history should show stability. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, finding a new career in the middle of your approval process could affect whether or not you are approved.

Don't switch banks or move money around in your accounts. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other assets) will be studied as the lender makes decisions regarding your mortgage application. To detect potential fraud, most lenders need a thorough paper trail to verify the source of all incoming funds. No matter the reason, switching banks or transferring money can raise a red flag with the lender and impede your approval process.

Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. As a rule, your earnest money belongs to you, not the seller until the sale is final. Although your FSBO seller might not understand this, your good faith funds should go toward your closing expenses. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the deal closes. If your home purchase fails, your purchase contract should dictate to whom the good faith deposit should go.

The Reen Team at Direct Mortgage Funding can answer questions about these "Don'ts" and many others. Call us: 4086261879.

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