What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before the keys are handed over. We have listed some things below we suggest you stay away from when waiting for your loan to close.

Don't overspend on big-ticket items You may be tempted to order that new couch for the soon-to-be-yours living room, but it's advisable to stay away from making large buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Since lenders are reviewing your financial accounts, a large cash purchase is also not advised.

Don't get a new career. Lenders feel comfortable seeing a consistent career history on your application. Finding a new job (particularly one with a bump in salary) may not jeopardize your ability to qualify for a loan. However, if you switch careers before you qualify, your process could fail or be stalled.

Don't change banks or move cash around in your accounts. While the lender reviews your mortgage loan application, you will probably be required to submit bank statements for the last few months on your saving and checking accounts, money market accounts and other liquid wealth. To eliminate potential fraud, most lending institutions require detailed paperwork to document the source of all incoming funds. No matter the reason, switching banks or moving money from one account to another may raise a red flag with your lender and slow your qualification process.

Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it remains yours until the sale closes. Although your seller may not understand this, any earnest money must be used for your closing expenses. Find an attorney or other neutral person who can hang on to the money or place it in a trust account until you close. Your contract should specify who gets the earnest funds if the home purchase fails.

Mortgage Headquarters of Missouri, Inc can answer questions about these "Don'ts" and many others. Call us at 5733029990.