What to Avoid During a Home Purchase

What's better than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. There still remain a few major hurdles to jump before closing. Below you'll find a list of things to stay away from during this crucial time of your home purchase.

Don't make expensive purchases. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to buy big items can also be a mistake: many banks consider your cash on hand when approving your loan.

Don't look for a new job. Stability in your career history is a good thing to banks and other lenders. Changing jobs may not compromise your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, switching careers in the middle of the loan process may influence your approval.

Don't take your accounts to a new bank or move around your money. Your lending institution will instruct the submission of recent bank statements of your accounts: checking, savings, money market, and other assets. In order to avoid fraud, lenders want to see clear documentation of how you earn your money and where any additional funds come from. No matter the reason, switching banks or moving funds from one account to another may raise a red flag with the lender and slow your application process.

Don't give funds directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. Your earnest money does not belong to the seller: it is actually yours until closing. Your FSBO seller might not know that these good faith funds should be applied to your expenses upon closing. Find a lawyer or other neutral party who can hang on to the deposit or place it in a trust account until you close. The contract should dictate who keeps the earnest funds if the home purchase falls through.

At Mortgage Headquarters of Missouri, Inc, we answer questions about this process every day. Call us at 5733029990.