What to Avoid During a Home Purchase

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of things to stay away from during this critical time of your home purchase.

Don't make expensive purchases. Although you will be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and car purchases until the closing of your loan. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. It's even a mistake to make those big-ticket purchases with cash. Lending Institutions are looking at your available cash when considering your loan.

Don't look for a new job. Lenders like to see a consistent career history on your application forms. Getting a new job before you start the application process for a mortgage loan may not get in the way of your approval at all. However, switching careers in the middle of your application process might influence whether or not you are approved.

Don't change banks or move finances around in your bank accounts. While the lender reviews your mortgage loan application, you will likely be required to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market accounts and other liquid finances. To eliminate potential fraud, most lending institutions require a detailed paper trail to document the source of all funds. Changing banks or moving funds elsewhere - even if its just to pool funds - could make it difficult for the lender to document your funds.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not the seller until the deal closes. Your earnest money is to be applied to your expenses upon closing; some FSBO sellers might not know this. Find a lawyer or other neutral person who is able to hang on to the funds or put them in a trust account until closing. Should your home purchase fail, your purchase agreement should specify where this earnest money should go.

At Greystone Loans, Inc., we answer questions about this process every day. Call us at 9094671090.