Things to Avoid While Purchasing a Home

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What's better than buying a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before closing could be trouble. Until the keys are handed over, there still remain some hoops to jump through. We have listed some things below we suggest you avoid when waiting for closing.

Don't buy luxury items. You may be tempted to order that new Turkish rug for the soon-to-be-yours living room, but it's advisable to stay away from making major buys like furniture, appliances, jewelry, or cars until closing. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to purchase expensive items can even be a mistake: many lending institutions consider your cash on hand when approving your loan.

Don't go on a career search. Consistency in your career history is a good thing to banks and other lenders. Getting a new career before you apply for a loan may not get in the way of your approval at all. However, if you switch careers before approval, your mortgage process could fail or be slowed down.

Don't take your accounts to a new bank or move around your finances. Bank statements from the last few months for accounts in your name (checking, savings, money market, and others) will be analyzed as the lender considers your approval. To avoid potential fraud, most lenders need a detailed paper trail to determine the source of all funds. No matter the reason, switching banks or transferring funds can raise a red flag with your lender and slow down your qualification process.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until the sale is complete, any earnest money remains yours. Some sellers might not know that any good faith funds should go toward your expenses at closing. We recommend that you put the money into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. The final disposition of good faith money, in the case of a failed transaction, should be written in the contract with your seller.

The Mortgage Team can walk you through the pitfalls of getting a mortgage. Give us a call at 517-266-7651.