What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Until your loan closes, there still remain some hurdles to jump. We have listed some things below you will want to avoid when waiting for closing.

Don't buy luxury items. You may be tempted to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making large purchases like furniture, appliances, electronic equipment, or cars until closing. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to purchase expensive items can also create a problem: most banks consider your cash reserve when approving your application.

Don't look for a new job. Your recent work history should show stability. Changing jobs may not affect your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. However, if you switch careers before you qualify, your mortgage process could fail or be bogged down.

Don't take your accounts to a new bank or move around your money. As the lender reviews your mortgage loan package, you will probably be required to provide bank statements for recent months for your checking and savings accounts, money market accounts and other liquid finances. To detect fraud, lenders look for clear documentation of how you earn your living and where any additional money comes from. Switching banks or transferring funds elsewhere - even if its just to consolidate funds - might make it harder for your lender to document your funds.

Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the earnest money actually belongs to you. The FSBO seller may not know that these good faith funds should go toward your expenses at closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. If your transaction fails, your contract with the seller should indicate where the earnest money should go.

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