Things to Avoid While Buying a New Home

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's even a mistake to make those large purchases with cash. Lenders are examining your cash reserve when considering your loan.

Don't get a new job. Lenders like to see a consistent job history on your paperwork. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, switching careers in the middle of your application process could affect whether or not you are approved.

Don't change banks or move cash around in your accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will be analyzed as the lending institution considers your application. The lending institution will need to see a steady flow of your money each pay period, in order to avoid fraud. No matter the purpose, changing banks or moving funds from one account to another may raise a red flag with your lender and slow down your loan process.

Don't give money directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. Some FSBO sellers might not know that the good faith funds is to be applied to your expenses at closing. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until you close. Your contract should document to whom the funds go if the home purchase does not go through.

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