Things to Avoid While Purchasing a New Home

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What's more fun than buying a bunch of new stuff to go in your future home? Not much. But buying big ticket items before closing can be a mistake. There still remain a few major hurdles to jump before closing. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't buy luxury items. You may be itching to buy that new easy-chair for the soon-to-be-yours den, but it's best to avoid making major buys like furniture, appliances, jewelry, or vacations until your home loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Because lenders are reviewing your financial accounts, a large cash purchase is also not advised.

Don't go on a job search. Lenders look for a consistent job history on your paperwork. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, getting a new job during your approval process could affect your approval.

Don't take your accounts to a new bank or move around your finances. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will probably be studied as the lender considers your application. To avoid fraud, lenders look for clear documentation of how you earn your living and where any additional money comes from. No matter the purpose, switching banks or transferring funds may raise a red flag with your lender and slow your application process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until the completion of the deal, the earnest money remains yours. Although your FSBO seller might not understand this, any good faith funds must go toward your closing expenses. Find a lawyer or other neutral person who will hold the funds or put them in a trust account until closing. The final disposition of earnest money, in the case of a failed transaction, should be specified in the contract with the seller.

Nova Home Loans can answer questions about these "Don'ts" and many others. Give us a call at 720-279-5932.