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 accepts their offer and the lender approves the loan. Keep in mind that until you get the keys, your lender is watching your accounts very closely. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.

Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to buy big-ticket items can also be a problem: many banks take into consideration your cash reserve when approving your application.

Don't go on a job search. Your recent job history should show stability. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are improving your salary. However, if you switch careers before you qualify, your loan process could fail or be bogged down.

Don't take your accounts to a new bank or move around your cash. As your lender considers your loan package, you will probably be instructed to produce bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid finances. Your lender looks for a steady rise and fall of your money each pay period, in the interest of ruling out fraud. Switching banks or transferring finances to another account - even if its merely to consolidate funds - may hinder the review of your accounts.

Don't give cash directly to your seller (commonly in the case of of "for sale by owner") for a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. The earnest money is to go toward your expenses closing; some FSBO sellers may not understand this. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until you close. The contract should dictate who keeps the earnest funds if the home purchase fails.

Metro Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 866-300-1550.