Things to Avoid While Purchasing a New Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves the loan. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't make expensive purchases. Although you will be planning ways to turn your new home into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and car purchases until your loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Using cash to purchase expensive items can even be an issue: many lenders take into consideration your cash on hand when approving your mortgage loan.

Don't get a new job. Stability in your work history is a positive thing to banks and other lenders. Finding a new career (particularly one with a bump in salary) may not hinder your ability to qualify for your loan. However, finding a new career during the application process might affect whether or not you are approved.

Don't switch your accounts to a new bank or move around your money. Bank statements from the last two or three months for all of your accounts (checking, savings, money market, and other accounts) will likely be analyzed as the lending institution considers your mortgage application. To avoid potential fraud, most loans want a detailed paper trail to determine the source of all incoming funds. Changing banks or transferring money elsewhere - even if its only to pool funds - might hinder the documentation of your accounts.

Don't give cash directly to your seller (usually in the case of of "for sale by owner") for a "good faith" deposit. Your earnest money does not belong to the seller: it remains yours until closing. Your good faith money is to go toward your expenses upon closing; some FSBO sellers might not understand this. Find an attorney or other neutral party who can hang on to the money or put it in a trust account until you close. The final disposition of earnest money, if your sale fails, should be written in the purchase agreement with the seller.

At Boardwalk Mortgage, we answer questions about this process every day. Call us: 1-800-606-2794.