What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves the loan. Until the keys are handed over, there are still some hoops to jump through. Below you'll find a list of things to avoid during this crucial time of your home purchase.

Don't overspend on big-ticket items Although you will be planning ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until your loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. It's also a red flag to make those large purchases using cash. Lenders are looking at your cash on hand when considering your loan.

Don't get a new career. Stability in your job history is a positive thing to lenders. Getting a new job before you start the application process for a mortgage may not get in the way of your approval at all. However, if you switch careers before your loan is approved, your process could fail or be slowed down.

Don't switch your accounts to a new bank or move around your finances. As your lending institution reviews your mortgage loan package, you will likely be required to provide bank statements for recent months for your checking and savings accounts, money market funds and other liquid finances. The lending institution needs to see a steady rise and fall of your funds each month, in order to rule out fraud. Switching banks or moving funds elsewhere - even if its merely to pool funds - may make it difficult for your lender to document your funds.

Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although some individual sellers may not know this, any earnest money should be used for your closing expenses. We recommend that you put the money into a trust account, or get a neutral party, like an attorney, to hold it until the deal closes. The final disposition of earnest funds, in the case of a failed transaction, should be indicated in the contract with your seller.

F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org) can walk you through the pitfalls of getting a mortgage. Call us: 214-300-8756.