What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. There still remain a few major hurdles to jump before closing. Here are some actions to refrain from during the home buying process to be sure the transaction goes smoothly.

Don't empty your wallet on big-ticket items Although you may be planning ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until your loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's also a mistake to make those big purchases using cash. Lenders are looking at your available cash when considering your loan.

Don't get a new job. Stability in your job history is a positive thing to lenders. Finding a new job (particularly one with a bigger salary) may not hinder your ability to qualify for a loan. However, finding a new career during your loan process may influence your approval.

Don't switch your accounts to a new bank or move around your finances. As your lending institution considers your loan application, you will probably be asked to produce bank statements for the last few months for your saving and checking accounts, money market funds and other liquid assets. The lending institution looks for a steady rise and fall of your funds over the pay period, in order to avoid fraud. Even for innocent reasons, moving around cash or changing banks could make it more difficult for your lender to verify your account history.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it is actually yours until closing. The earnest funds are to go toward your expenses upon closing; the FSBO seller might not understand this. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The contract should dictate where the funds go if the home purchase fails.

BeneGroup, Inc. can answer questions about these "Don'ts" and many others. Give us a call: 4083956018.