What to Avoid During your Home Purchase

Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves their loan. There still remain a few major hurdles to jump before closing. We have listed some things below you will want to stay away from when waiting for your loan to close.

Don't overspend on big-ticket items Although you will be planning ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until the closing of your loan. Financing new furniture 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 also create a mistake: most lenders consider your available cash when approving your mortgage.

Don't go on a career search. Lenders look for a consistent job history on your paperwork. Changing jobs may not affect your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, getting a new job in the middle of the approval process could affect your approval.

Don't switch banks or move finances around in your accounts. Bank statements from the last few months for your accounts (savings, checking, money market, and other accounts) will probably be analyzed as the lending institution considers your approval. To detect potential fraud, most lending institutions want a detailed paper trail to verify the source of all funds. Switching banks or moving finances elsewhere - no matter the purpose - might hinder the review of your funds.

Don't give funds directly to your seller (generally in cases of "for sale by owner") for a "good faith" deposit. Until closing, the good faith deposit remains yours. The good faith money is to go toward your expenses upon closing; some sellers may not realize this. We recommend that you put the money into a trust account, or get an attorney to hold it until the closing of the sale. The disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with the seller.

Executive Lending Group can answer questions about these "Don'ts" and many others. Call us at (405) 822-1957.

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