What to Avoid During a Home Purchase

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What's more fun than buying a bunch of new stuff to go in your future home? Nothing. But making big purchases before your loan closes can be harmful. Until the keys are handed over, there are still some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't buy big-ticket items. It may be tempting to buy that new couch for the soon-to-be-yours den, but it's best to avoid making large buys like furniture, appliances, jewelry, or cars until closing. Using plastic to buy new living room furniture could jeopardize your lending process by altering your numbers dramatically. Using cash to buy big items can even create a bad idea: most lenders take into consideration your available cash when approving your mortgage loan.

Don't get a new career. Lending Institutions look for a consistent work history on your application. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are improving your salary. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.

Don't move finances around or change banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will likely be analyzed as the lender makes decisions regarding your mortgage application. The lending institution is looking for a consistent rise and fall of your funds over the pay period, in order to rule out fraud. No matter the reason, moving banks or transferring funds could raise a red flag with the lender and slow your loan process.

Don't give money directly to your seller (commonly in the case of of "for sale by owner") to be considered earnest money. Your good faith money does not belong to the seller: it remains yours until the transaction is final. The good faith funds are to go toward your expenses closing; your individual seller might not know this. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until you close. The purchase contract should document who keeps the earnest funds if the transaction does not go through.

At Hometown Mortgage Services, LLC, we answer questions about this process every day. Call us at (352) 222-1135.

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