What to Avoid During a Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before closing. Below you'll find a list of things to avoid during this crucial time of your home purchase.

Don't make expensive purchases. Although you will be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until your loan closes. You may send up red flags with your lender if you purchase your furniture on your credit cards in the middle of your loan process. Since lenders are reviewing your bank accounts, a large cash purchase is also a bad idea.

Don't look for a new career. Consistency in your job history is a positive thing to lenders. Finding a new career (particularly one with a bigger paycheck) may not affect your ability to qualify for your mortgage. However, finding a new career in the middle of the application process may affect your approval.

Don't move finances around or change banks. As the lender considers your mortgage application, you will probably be asked to submit bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid wealth. To detect fraud, lenders require a consistent portrayal of how you earn your living and where additional money comes from. Even for innocent purposes, transferring finances or changing banks may make it harder for the lending institution to verify your account history.

Don't hand over 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 the sale closes. Although your seller might not know this, any earnest money must be applied to the buyer's closing expenses. Get an attorney or other neutral person who will hold the money or put it in a trust account until closing. The disposition of earnest money, in the case of a failed transaction, should be specified in the purchase agreement with your seller.

Marshall Lending can answer questions about these "Don'ts" and many others. Give us a call at 9162758775.