Things to Avoid While Purchasing a New Home

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves their loan. Keep in mind that until you get the keys, your lender is watching your finances very closely. Here are some things to avoid during the home buying process to be sure the transaction goes smoothly.

Don't buy big-ticket items. You may be tempted to buy that new couch for the soon-to-be-yours living room, but it's advisable to avoid making big ticket purchases like furniture, appliances, jewelry, or vacations until closing. Using plastic to buy furniture could compromise your lending process by altering your numbers dramatically. It's also a mistake to make those big purchases with cash. Lenders are examining your cash on hand when considering your loan.

Don't look for a new career. Lending Institutions feel comfortable seeing a consistent career history on your paperwork. Finding a new career (particularly one with a better salary) may not jeopardize your ability to qualify for your mortgage loan. But for some, switching jobs during the mortgage approval process could raise concern and stymie your application.

Don't switch your accounts to a new bank or move around your money. Bank statements from recent months for accounts in your name (savings, checking, money market, and others) will probably be studied as the lender considers your mortgage application. The lending institution will need to see a steady flow of your money over the month, in the interest of avoiding fraud. Even for innocent purposes, moving around money or switching banks might make it more difficult for the lending institution to confirm your account history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Your earnest money is to go toward your expenses closing; some FSBO sellers might not understand this. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the deal closes. The disposition of earnest funds, in the case of a failed transaction, should be documented in the purchase agreement with your seller.

At BeneGroup, Inc., we answer questions about this process every day. Give us a call at 4083956018.