What to Avoid During your Home Purchase

What's better than buying a bunch of new furniture to go in your future home? Not much. But making big ticket purchases before closing can be harmful. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some things to avoid before closing to be sure the transaction goes smoothly.

Don't empty your wallet on big-ticket items Although you may be dreaming of ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Using plastic to buy furniture could jeopardize your lending process by altering your numbers dramatically. Since lending institutions are perusing your financial accounts, a large cash purchase is also a bad idea.

Don't look for a new job. Stability in your work history is a good thing to lenders. Finding a new career (especially one with a bigger salary) may not hinder your ability to qualify for a mortgage loan. However, if you switch careers before your loan is approved, your loan process could fail or be bogged down.

Don't move money around or change banks. Most lenders will ask for recent bank statements of all of your accounts: checking, savings, money market, and other assets. To avoid fraud, lenders need clear documentation of how you earn your money and where additional funds come from. Changing banks or moving money to another account - for whatever reason - might hinder the review of your accounts.

Don't give money directly to your seller (commonly in cases of "for sale by owner") to be used as a "good faith" deposit. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Although some FSBO sellers might not know this, the earnest money should be applied to the buyer's closing expenses. An attorney or other type of neutral party can hold your funds, or you may place them temporarily into a trust account until you close. The contract should document who gets the earnest funds if the transaction falls through.

At Affirm Home Loans, we answer questions about this process every day. Call us: (972) 292-0448.

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