Things to Avoid While Buying a Home

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With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. It's wise to remember that until closing, your lender is watching your accounts very closely. We have listed some actions below you will want to avoid when waiting for closing.

Don't overspend on big-ticket items Although you will be planning ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a mistake to make those large purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.

Don't get a new career. Lending Institutions look for a consistent work history on your application forms. Finding a new job (particularly one with a bump in salary) may not change your ability to qualify for a mortgage loan. But for some people, switching jobs during the loan approval process may raise concern and stymie your approval.

Don't move finances around or switch banks. While your lending institution considers your loan application, you will likely be asked to produce bank statements for the last few months on your saving and checking accounts, money market accounts and other liquid assets. To avoid potential fraud, most loans need thorough paperwork to verify the source of all cash. Changing banks or moving finances elsewhere - even if its just to consolidate funds - may make it harder for the lender to verify your funds.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Some sellers may not realize that the good faith funds is to be applied to your expenses upon closing. Find an attorney or other neutral person who can hang on to the funds or put them in a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be indicated in the contract with your seller.

At e-mortgageinfo.com, we answer questions about this process every day. Give us a call: 703-912-9122.