Things to Avoid While Purchasing a New Home

Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. It's wise to remember that until closing, your lender is watching you very closely. Here are some things to refrain from during the home buying process to be sure the transaction goes smoothly.

Don't buy big-ticket items. Although you will be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and car purchases until the closing of your loan. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy big items can even create a mistake: most lenders consider your cash reserve when approving your mortgage.

Don't look for a new job. Lending Institutions feel comfortable seeing a consistent work history on your application. Finding a new career (especially one with a bigger salary) may not affect your ability to qualify for your mortgage loan. But for some people, getting a new career during the mortgage approval process could bring concern and stymie your approval.

Don't switch banks or move cash around in your bank accounts. As your lender reviews your loan application, you will likely be instructed to submit bank statements for recent months on your checking accounts, savings accounts, money market funds and other liquid finances. To detect potential fraud, most loans require detailed paperwork to determine the source of all cash. Even for innocent purposes, transferring cash or switching banks might make it more difficult for the lender to confirm your account history.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith deposit actually belongs to you. Some FSBO sellers may not realize that your good faith funds should be used for your expenses at closing. Get an attorney or other neutral party who will hang on to the funds or place them in a trust account until you close. Should your home purchase fail, the contract with the seller should specify to whom this good faith deposit should go.

At Integrated Financial Solutions, LLC, we answer questions about this process every day. Give us a call at 4104614043.