What to Avoid During a Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't buy big-ticket items. Although you will be planning ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until your loan closes. Using credit cards to buy new living room furniture could compromise your loan process by distorting your numbers. It's even a red flag to make those big-ticket purchases using cash. Lenders are examining your available cash when considering your loan.

Don't get a new job. Your recent work history should show stability. Getting a new job before you start the application process for a loan may not get in the way of your approval at all. However, getting a new job during the loan process may affect your approval.

Don't take your accounts to a new bank or move around your finances. Bank statements from recent months for accounts in your name (checking, savings, money market, and other assets) will probably be analyzed as the lending institution makes decisions regarding your mortgage application. To avoid potential fraud, most lending institutions want thorough paperwork to document the source of all funds. No matter the reason, moving banks or transferring funds may raise a red flag with the lender and slow down your application process.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith money is yours, not the seller's until the sale is final. Your good faith funds are to be applied to your expenses upon closing; your individual seller might not know this. Get an attorney or other neutral person who is able to hang on to the funds or put them in a trust account until closing. The disposition of earnest funds, in the case of a failed transaction, should be documented in the contract with your seller.

Trustin Mortgage, LLC can answer questions about these "Don'ts" and many others. Call us at (302) 765-8089.

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