What to Avoid During your Home Purchase

What's better than buying a bunch of new furniture to adorn your future home? Not much. But making large purchases before closing could be trouble. Until the keys are handed over, there are still some hoops to jump through. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't buy big-ticket items. It may be tempting to buy that new easy-chair for the soon-to-be-yours den, but it's advisable to stay away from making large buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy expensive items can even create a bad idea: most banks take into consideration your cash reserve when approving your loan.

Don't go on a career search. Your recent work history should show consistency. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before approval, your loan process could fail or be bogged down.

Don't take your accounts to a new bank or move around your finances. Your lending institution will require you to provide recent bank statements on your accounts: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most lending institutions require detailed paperwork to document the source of all funds. No matter the purpose, moving banks or moving money from one account to another could raise a red flag with your lender and slow your loan process.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Some FSBO sellers might not know that the earnest money should go toward your expenses upon closing. You'll need to put the money into a trust account, or get a neutral party, like an attorney, to hold it until the deal closes. The disposition of good faith funds, in the case of a failed transaction, should be specified in the contract with the seller.

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