Things to Avoid While Purchasing a New Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Here are some actions to avoid before closing to assure the transaction goes smoothly.

Don't buy luxury items. It may be tempting to buy that new sofa for the soon-to-be-yours living room, but it's best to stay away from making major buys like furniture, appliances, jewelry, or cars until closing. You may send up red flags with your lender if you buy your electronics on your credit cards during your loan process. Using cash to buy big-ticket items can also be a mistake: many lending institutions take into consideration your cash reserve when approving your mortgage.

Don't look for a new career. Consistency in your career history is a positive thing to lenders. Finding a new career (particularly one with a bigger salary) may not affect your ability to qualify for your loan. But for some, switching jobs during the loan application process might bring concern and affect your application.

Don't switch your accounts to a new bank or move around your finances. Most lenders will require you to provide recent bank statements on all of your accounts: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most lending institutions need a thorough paper trail to document the source of all cash. Even for practical purposes, moving around money or switching banks might make it more difficult for the lending institution to verify your bank history.

Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not to the seller up until closing. Your seller might not know that any good faith funds is to be applied to your expenses upon closing. Find an attorney or other neutral person who is able to hang on to the funds or put them in a trust account until you close. Your contract should dictate who keeps the deposit if the home purchase does not go through.

At Executive Lending Group, we answer questions about this process every day. Give us a call at (405) 822-1957.

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