What to Avoid During your Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. It's wise to remember that until your keys are in hand, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.

Don't make expensive purchases. Although you may be listing ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until your loan closes. You may send up red flags with your lender if you purchase new furniture on your credit cards during your loan process. Using cash to purchase big-ticket items can even create a bad idea: most banks consider your cash on hand when approving your mortgage.

Don't get a new career. Lenders like to see a consistent career history on your application forms. Finding a new job (particularly one with a bigger salary) may not jeopardize your ability to qualify for a mortgage loan. But for some people, getting a new career during the loan approval process may raise concern and stymie your approval.

Don't switch your accounts to a new bank or move around your cash. As the lender reviews your loan application, you will likely be asked to produce bank statements for recent months on your saving and checking accounts, money market funds and other liquid assets. The lender wants to see a consistent rise and fall of your money over the pay period, in the interest of avoiding fraud. Switching banks or transferring money to another account - even if its only to consolidate funds - might hinder the review of your funds.

Don't give cash directly to your seller (generally in cases of "for sale by owner") for a "good faith" deposit. As a rule, your good faith money is yours, not the seller's up until the deal closes. Your earnest money is to go toward your expenses upon closing; some FSBO sellers may not realize this. Get an attorney or other neutral party who can hold the funds or put them in a trust account until closing. The contract should dictate to whom the deposit goes if the home purchase does not go through.

At Firelight Mortgage Consultants, we answer questions about this process every day. Give us a call at 3032282254.