What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't throw your money around. Although you may be planning ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's even a red flag to make those large purchases with cash. Lenders are examining your cash reserve when considering your loan.

Don't get a new career. Lending Institutions look for a consistent career history on your paperwork. Getting a new job before you apply for a loan may not get in the way of your approval at all. However, switching careers in the middle of your loan process may affect whether or not you are approved.

Don't move finances around or switch banks. As your lender reviews your loan application, you will likely be required to produce bank statements for the last two or three months for your checking and savings accounts, money market accounts and other liquid finances. Your lender hopes to see a steady flow of your funds over the pay period, in order to avoid fraud. No matter the purpose, switching banks or moving funds from one account to another can raise a red flag with the lender and slow down your application process.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not to the seller until closing. Although your seller might not know this, your earnest money must be applied to the buyer's closing expenses. Get an attorney or other neutral person who will hang on to the funds or put them in a trust account until closing. Should your home purchase fail, the purchase agreement should specify where the good faith deposit should go.

Dayspring Bank can walk you through the pitfalls of getting a mortgage. Call us at 4025970500.

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