What to Avoid During a 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 the loan. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Below you'll find a list of actions to stay away from during this critical time of your home purchase.

Don't empty your wallet on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Using plastic to buy furniture could compromise your loan process by distorting your numbers. It's also a bad idea to make those large purchases with cash. Lenders are examining your cash reserve when considering your loan.

Don't go on a career search. Lenders like to see a consistent job history on your application. Getting a new job before you start the application process for a loan may not affect your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.

Don't move cash around or change banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will probably be studied as the lending institution considers your application. To detect potential fraud, most loans want thorough paperwork to document the source of all funds. No matter the reason, changing banks or moving money from one account to another can raise a red flag with the lender and impede your application process.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith deposit belongs to you, not the seller until closing. Although your seller might not realize this, the earnest money must be used for the buyer's closing expenses. Find a lawyer or other neutral person who will hang on to the funds or put them in a trust account until you close. The disposition of good faith funds, if your sale fails, should be written in the purchase agreement with your seller.

BeneGroup, Inc. can walk you through the pitfalls of getting a mortgage. Call us: 4083956018.