Things to Avoid While Purchasing a Home

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Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before your loan closes. We have given you a list of things below you will want to stay away from when waiting for closing.

Don't make expensive purchases. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until closing. Using plastic to buy furniture could compromise your loan process by distorting your numbers. Using cash to purchase expensive items can even create a mistake: most lending institutions take into consideration your available cash when approving your loan.

Don't look for a new job. Stability in your work history is a good thing to banks and other lenders. Getting a new career before you apply for a loan may not affect your approval at all. However, if you switch careers before approval, your process could fail or be stalled.

Don't take your accounts to a new bank or move around your money. Your lender will require you to submit recent bank statements for accounts in your name: savings, checking, money market, and other liquid assets. Your lender is looking for a steady rise and fall of your money each month, in the interest of avoiding fraud. Even for practical purposes, transferring finances or switching banks might make it harder for the lending institution to document your bank history.

Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any good faith deposit remains yours. The earnest money is to go toward your expenses upon closing; some individual sellers might not know this. Get a lawyer or other neutral party who can hold the deposit or place it in a trust account until you close. The contract should indicate who keeps the deposit if the home purchase fails.

Charles Scott can answer questions about these "Don'ts" and many others. Call us at (916)-792-8660.