What to Avoid During a Home Purchase

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Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Until the house is really yours, there still remain some hoops to jump through. We have given you a list of actions below we suggest you avoid when waiting for closing.

Don't throw your money around. You may be tempted to order that new sofa for the soon-to-be-yours living room, but it's best to avoid making big ticket purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. Using cash to purchase expensive items can even create a bad idea: many banks look at your available cash when approving your loan.

Don't get a new job. Lending Institutions like to see a consistent job history on your paperwork. Finding a new career (particularly one with a bigger paycheck) may not jeopardize your ability to qualify for a mortgage. However, if you switch careers before your loan is approved, your loan process could fail or be bogged down.

Don't change banks or move money around in your accounts. Bank statements from the last few months for accounts in your name (checking, savings, money market, and others) will be studied as the lender makes decisions regarding your loan application. To eliminate fraud, lenders look for clear documentation of how you earn your money and where any additional funds come from. No matter the purpose, changing banks or moving money from one account to another can raise a red flag with your lender and slow your application process.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith money does not belong to the seller: it is actually yours until closing. Although your FSBO seller might not understand this, any good faith funds must be used for your closing expenses. It's best to put the money into a trust account, or get an attorney to hold it until the closing of the sale. The final disposition of good faith money, in the case of a failed transaction, should be indicated in the contract with the seller.

CU Mortgage Division can answer questions about these "Don'ts" and many others. Call us at 360-539-4687.