What to Avoid During your Home Purchase

What's more fun than buying a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. Keep in mind that until you get the keys, your lender is watching your finances very closely. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.

Don't make expensive purchases. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until your loan closes. Using credit cards to buy furniture could compromise your loan process by altering your numbers dramatically. It's even a red flag to make those large purchases with cash. Lenders are looking at your cash reserve when considering your loan.

Don't go on a job search. Lending Institutions look for a consistent work history on your application. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.

Don't switch banks or move finances around in your accounts. Your lender will require you to submit recent bank statements of your accounts: savings, checking, money market, and other liquid assets. In order to detect fraud, lenders will need a consistent portrayal of how you earn your living and where any additional money comes from. No matter the reason, moving banks or transferring money might raise a red flag with the lender and slow down your application process.

Don't give 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 the sale is final. Although some FSBO sellers might not know this, any good faith money must go toward the buyer's closing expenses. Get an attorney or other neutral party who can hang on to the funds or put them in a trust account until you close. The disposition of earnest money, in the case of a failed transaction, should be specified in the purchase agreement with the seller.

Firelight Mortgage Consultants can walk you through the pitfalls of getting a mortgage. Call us: 7209331025.