What to Avoid During a Home Purchase

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until closing, there still remain some hoops to jump through. Here are some things to avoid before closing to be sure the transaction goes well.

Don't make expensive purchases. Although you will be listing ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and car purchases until your loan closes. You may send up red flags with your lender if you finance your appliances on your credit cards in the middle of your loan process. Using cash to buy big items can also create an issue: many lending institutions take into consideration your available cash when approving your mortgage.

Don't get a new career. Lenders like to see a consistent work history on your application forms. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are getting a better salary. However, switching careers during your application process may affect whether or not you are approved.

Don't switch your accounts to a new bank or move around your money. As your lender reviews your loan package, you will probably be required to produce bank statements for the last few months for your checking and savings accounts, money market funds and other liquid wealth. To detect potential fraud, most lending institutions require thorough paperwork to determine the source of all cash. Switching banks or moving finances elsewhere - for whatever reason - might hinder the documentation of your accounts.

Don't give money directly to your seller (generally in the case of of "for sale by owner") for earnest money. As a rule, your good faith deposit is yours, not the seller's up until closing. Any earnest money is to be applied to your expenses upon closing; some FSBO sellers might not realize this. Find a lawyer or other neutral party who can hang on to the deposit or place it in a trust account until closing. The contract should specify where the money goes if the home purchase does not go through.

Metro Mortgage can answer questions about these "Don'ts" and many others. Call us at 866-300-1550.