Things to Avoid While Purchasing a Home

What's better than getting a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Here are some actions to refrain from before closing to be sure your transaction goes well.

Don't empty your wallet on big-ticket items You may be itching to buy that new couch for the soon-to-be-yours den, but it's advisable to avoid making big ticket buys like furniture, appliances, jewelry, or vacations 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 buy big items can also create a bad idea: most banks take into consideration your cash on hand when approving your mortgage.

Don't look for a new career. Your recent job history should show consistency. Finding a new job (particularly one with a better salary) may not change your ability to qualify for a mortgage. However, switching careers in the middle of your approval process may affect your approval.

Don't move finances around or change banks. As your lending institution reviews your mortgage package, you will probably be instructed to produce bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid finances. To detect potential fraud, most loans require a detailed paper trail to document the source of all funds. Even for practical reasons, moving around finances or changing banks could make it harder for your lender to confirm your account history.

Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be considered a "good faith" deposit. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. Some FSBO sellers may not realize that any good faith funds must be applied to your expenses at closing. Get a lawyer or other neutral person who will hold the funds or place them in a trust account until closing. If your transaction fails, your purchase agreement should document to whom this good faith deposit should go.

Greystone Loans, Inc. can answer questions about these "Don'ts" and many others. Call us at 9094671090.