What to Avoid During your Home Purchase

What's more fun than buying a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes can be an error. There are still a few major hurdles to jump before closing. Here are some actions to stay clear of during the home buying process to be sure your transaction goes well.

Don't overspend on big-ticket items You may be itching to order that new easy-chair for the soon-to-be-yours parlor, but it's best to stay away from making large purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lenders are perusing your financial accounts, a large cash purchase is also not advised.

Don't get a new career. Lenders feel comfortable seeing a consistent career history on your application. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, if you switch careers before you qualify, your loan process could fail or be stalled.

Don't switch banks or move money around in your accounts. Most lenders will require you to provide recent bank statements on accounts in your name: savings, checking, money market, and other assets. To eliminate potential fraud, most lending institutions require a detailed paper trail to verify the source of all cash. No matter the reason, changing banks or transferring funds can raise a red flag with your lender and slow your approval process.

Don't give funds directly to your seller (commonly in the case of of "for sale by owner") for earnest money. Until the completion of the deal, the earnest money actually belongs to you. Some sellers might not know that any good faith funds must go toward your expenses at closing. We recommend that you put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. The disposition of earnest funds, if your sale falls through, should be documented in the purchase agreement with the seller.

At VSI Home Lending, we answer questions about this process every day. Call us: 2603382561.