What to Avoid During a Home Purchase

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't overspend on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Because lenders are examining your financial accounts, a large cash purchase is also not advised.

Don't go on a job search. Stability in your job history is a positive thing to lenders. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, finding a new career in the middle of your loan process might affect whether or not you are approved.

Don't change banks or move finances around in your accounts. Most lenders will require you to submit recent bank statements for accounts in your name: checking, savings, money market, and other assets. Your lending institution hopes to see a consistent flow of your funds each month, in the interest of ruling out fraud. No matter the purpose, switching banks or transferring funds can raise a red flag with your lender and impede your qualification process.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your earnest money does not belong to the seller: it remains yours until the transaction is final. Your earnest funds are to go toward your expenses upon closing; some individual sellers might not understand this. Get a lawyer or other neutral party who will hang on to the funds or place them in a trust account until closing. The final disposition of good faith money, in the case of a failed transaction, should be documented in the purchase agreement with the seller.

At 1st Credential Mortgage Inc, we answer questions about this process every day. Give us a call at (281) 778-0805.