What to Avoid During your Home Purchase

What's better than getting a bunch of new furniture to adorn your future home? Nothing. But making big ticket purchases before closing could be trouble. It's best to remember that until your keys are in hand, your lender is watching you very closely. 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 will be dreaming of ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until your loan closes. Your lender may send up red flags if you finance new electronics on your credit cards in the middle of your loan process. Using cash to purchase big items can even be a bad idea: many banks look at your cash reserve when approving your mortgage loan.

Don't look for a new career. Your recent work history should show consistency. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are improving your salary. But in some cases, getting a new job during the mortgage loan application process may bring concern and hinder your application.

Don't switch your accounts to a new bank or move around your money. Your lender will instruct the submission of recent bank statements on your accounts: checking, savings, money market, and other assets. To eliminate fraud, lenders look for a clear and consistent picture of how you earn your money and where any additional wealth comes from. Even for practical purposes, transferring cash or changing banks could make it harder for your lending institution to verify your bank history.

Don't give funds directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your earnest money is yours, not the seller's up until the sale is final. Some FSBO sellers might not realize that these good faith funds should be applied to your expenses upon closing. We recommend that you put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. The contract should specify where the money goes if the transaction does not go through.

At F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about this process every day. Give us a call: 214-300-8756.

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