What to Avoid During a Home Purchase

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What's more fun than buying a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. There still remain a few major hurdles to jump before the house is really yours. Here are some actions to avoid before closing to be sure the transaction goes smoothly.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's even a bad idea to make those huge purchases using cash. Lenders are examining your cash reserve when considering your loan.

Don't get a new career. Your recent job history should show stability. Finding a new job (especially one with a better salary) may not change your ability to qualify for a loan. However, if you switch careers before you qualify, your loan process could fail or be stalled.

Don't switch banks or move money around in your bank accounts. Bank statements from the last few months for all of your accounts (savings, checking, money market, and other assets) will probably be studied as the lending institution considers your approval. To eliminate potential fraud, most loans require thorough paperwork to determine the source of all cash. Even for practical purposes, moving around finances or changing banks might make it more difficult for the lender to confirm your account history.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller until the sale is final. The good faith money is to go toward your expenses upon closing; some sellers may not understand this. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until you close. Your purchase contract should specify who keeps the earnest funds if the transaction falls through.

At Jeff White Lending, we answer questions about this process every day. Call us: (972) 292-0448.