What to Avoid During your Home Purchase

What's more fun than buying a bunch of new furnishings to go in your future home? Not much. But buying big ticket items before closing can be a mistake. It's wise to remember that until closing, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.

Don't buy big-ticket items. Although you will be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Your lender may send up red flags if you buy new appliances on your credit cards during your loan process. Using cash to purchase big items can even create an issue: many lending institutions consider your cash on hand when approving your mortgage.

Don't look for a new job. Your recent job history should show consistency. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are getting a better salary. But in some cases, changing jobs during the mortgage approval process might bring concern and affect your application.

Don't switch banks or move money around in your bank accounts. Your lender will require you to submit recent bank statements on accounts in your name: savings, checking, money market, and other liquid assets. In order to eliminate fraud, lenders look for a clear and consistent picture of how you earn your money and where additional money comes from. No matter the purpose, changing banks or transferring funds could raise a red flag with the lender and slow down your qualification process.

Don't give cash directly to your seller (usually in the case of of "for sale by owner") for earnest money. Your good faith money does not belong to the seller: it remains yours until the sale closes. A FSBO seller might not know that the earnest money should go toward your expenses upon closing. Find a lawyer or other neutral party who is able to hold the funds or put them in a trust account until you close. If your transaction fails, the purchase contract should indicate to whom this good faith funds should go.

VSI Home Lending can walk you through the pitfalls of getting a mortgage. Call us: (260) 338-2561.

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