Things to Avoid While Purchasing a Home

What's better than buying a bunch of new furniture to go in your future home? Nothing. But making large purchases before your loan closes could be trouble. Keep in mind that until closing, your lender is watching your finances very closely. Here are some things to refrain from during the home buying process to be sure the transaction goes smoothly.

Don't throw your money around. It may be tempting to order that new couch for the soon-to-be-yours parlor, but it's best to avoid making large buys like furniture, appliances, jewelry, or cars until closing. Your lender may send up red flags if you purchase new appliances on your credit cards during your loan process. Using cash to purchase big items can also create a problem: most lenders consider your available cash when approving your application.

Don't look for a new career. Lenders feel comfortable seeing a consistent work history on your application forms. Finding a new career (especially one with a bump in salary) may not jeopardize your ability to qualify for a mortgage loan. However, getting a new job in the middle of your approval process might influence whether or not you are approved.

Don't move cash around or switch banks. Most lenders will require you to provide recent bank statements for your accounts: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most lending institutions want detailed paperwork to verify the source of all incoming funds. Switching banks or moving money elsewhere - for whatever purpose - may make it harder for your lender to document your funds.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Although your seller may not realize this, your good faith funds should be used for your closing expenses. Find a lawyer or other neutral person who is able to hold the funds or place them in a trust account until closing. Should your home purchase fail, your contract with the seller should indicate where the earnest money should go.

At Pacificwide Lending, we answer questions about this process every day. Give us a call: 9254610500.