Things to Avoid While Purchasing a New Home

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Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves their loan. Keep in mind that until you get the keys, your lender is watching your finances very closely. We have listed some actions below you will want to stay away from when waiting for closing.

Don't buy big-ticket items. You may be tempted to order that new Turkish rug for the soon-to-be-yours den, but it's best to stay away from making large buys like furniture, appliances, jewelry, or vacations until closing. You may send up red flags with your lender if you purchase new appliances on your credit cards during your loan process. Using cash to purchase big-ticket items can even create a bad idea: most lending institutions take into consideration your cash on hand when approving your mortgage loan.

Don't go on a job search. Lending Institutions like to see a consistent work history on your paperwork. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, switching jobs in the middle of the loan process may affect your approval.

Don't change banks or move cash around in your bank accounts. Your lender will require you to produce recent bank statements on your accounts: savings, checking, money market, and other liquid assets. To avoid potential fraud, most lending institutions need detailed paperwork to document the source of all cash. Even for practical purposes, moving around cash or changing banks could make it harder for the lending institution to verify your bank history.

Don't give money directly to your seller (usually in cases of "for sale by owner") for a "good faith" deposit. Your good faith money does not belong to the seller: it remains yours until the transaction is final. The earnest money is to go toward your expenses closing; some FSBO sellers might not understand this. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until you close. Your purchase agreement should document to whom the money goes if the home purchase falls through.

AmeriFirst can answer questions about these "Don'ts" and many others. Give us a call: (219) 947-0001.