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 as soon as the seller says "yes" and the loan is approved. It's best to remember that until closing, your lender is watching your accounts very closely. We have given you a list of things below you will want to avoid when waiting for closing.

Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.

Don't look for a new job. Lending Institutions look for a consistent job history on your application forms. Changing jobs may not affect your ability to qualify for a loan - especially if you are going to be making more money. But for some, switching jobs during the mortgage approval process might raise concern and affect your approval.

Don't change banks or move finances around in your bank accounts. While your lending institution reviews your loan application, you will likely be asked to produce bank statements for the last few months for your saving and checking accounts, money market funds and other liquid wealth. The lender is looking for a steady flow of your funds each month, in order to avoid fraud. Changing banks or moving money to another account - no matter the purpose - could make it harder for the lender to verify your funds.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller up until the deal closes. Some sellers might not realize that any good faith funds should go toward your expenses upon closing. We recommend that you put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. The final disposition of good faith money, if your home purchase falls through, should be specified in the purchase agreement with the seller.

VENTURE DEVELOPMENT INC can answer questions about these "Don'ts" and many others. Give us a call: 952-929-2577.