Things to Avoid While Purchasing a Home

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Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the lender approves their loan. Until the house is really yours, there are still some hurdles to jump. Here are some things to avoid before closing to assure the transaction goes smoothly.

Don't buy luxury items. Although you will be listing ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you keep away from vacations and car purchases until the closing of your loan. Using plastic to buy new living room furniture could jeopardize your lending process by altering your numbers dramatically. It's even a bad idea to make those huge purchases with cash. Lenders are looking at your cash reserve when considering your loan.

Don't get a new job. Stability in your job history is a positive thing to lending institutions. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, if you switch careers before you qualify, your loan process could fail or be bogged down.

Don't change banks or move cash around in your bank accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will likely be studied as the lending institution makes decisions regarding your application. To eliminate potential fraud, most lending institutions want thorough paperwork to document the source of all funds. Even for innocent reasons, transferring money or switching banks may make it harder for your lender to verify your bank history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith money does not belong to the seller: it is actually yours until closing. Although some FSBO sellers might not understand this, the earnest money must be applied to the buyer's closing expenses. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until closing. The disposition of earnest money, if your transaction fails, should be specified in the purchase agreement with your seller.

Dynamic Mortgage Services Corp can walk you through the pitfalls of getting a mortgage. Give us a call: 302.227.4747.