What to Avoid During your Home Purchase

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

Don't make expensive purchases. Although you may be listing ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Using plastic to buy furniture could jeopardize your lending process by altering your numbers dramatically. Since lenders are reviewing your bank accounts, a large cash purchase is also not advised.

Don't go on a job search. Your recent work history should show stability. Finding a new job (especially one with a bump in salary) may not hinder your ability to qualify for your mortgage loan. However, if you switch careers before approval, your loan process could fail or be stalled.

Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for all of your accounts (savings, checking, money market, and others) will be analyzed as the lender considers your approval. To avoid potential fraud, most loans want detailed paperwork to verify the source of all incoming funds. Switching banks or moving funds elsewhere - even if its merely to pool funds - may make it harder for the lender to document your funds.

Don't give money directly to your seller (generally in cases of "for sale by owner") for a "good faith" deposit. Until the sale is complete, the good faith deposit remains yours. Your good faith funds are to be applied to your expenses upon closing; a FSBO seller might not realize this. You'll need to put the money into a trust account, or get a neutral party, like an attorney, to hold it until the deal closes. If your sale falls through, your contract with the seller should dictate to whom the good faith funds should go.

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

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