Things to Avoid While Buying a New Home

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves their loan. There still remain a few major hurdles to jump before the keys are handed over. We have listed some things below we suggest you stay away from when waiting for your loan to close.

Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and vehicle purchases until your loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to purchase big-ticket items can even be a problem: most banks take into consideration your cash on hand when approving your mortgage.

Don't go on a job search. Lending Institutions feel comfortable seeing a consistent work history on your paperwork. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are going to be making more money. But for some people, switching jobs during the mortgage approval process may bring concern and affect your application.

Don't change banks or move cash around in your accounts. As your lending institution reviews your mortgage application, you will likely be instructed to submit bank statements for the last few months for your checking and savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most lenders require thorough paperwork to document the source of all cash. Switching banks or moving finances elsewhere - even if its merely to pool funds - might hinder the documentation of your accounts.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although your seller might not understand this, the good faith funds should be used for the buyer's closing expenses. Get a lawyer or other neutral person who can hang on to the funds or put them in a trust account until closing. Should your home purchase fail, your contract with the seller should document where your good faith funds should go.

At BeneGroup, Inc., we answer questions about this process every day. Call us: 4083956018.

BeneGroup, Inc.

1999 South Bascom Avenue Suite 700
Campbell, CA 95008