Things to Avoid While Purchasing a Home

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Lots of new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves the loan. Until the house is really yours, there are still some hurdles to jump. Here are some actions to avoid before closing to assure the transaction goes smoothly.

Don't throw your money around. Although you will be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and car purchases until your loan closes. Using credit cards to buy furniture could jeopardize your lending process by altering your numbers dramatically. Using cash to purchase big-ticket items can also be a mistake: most banks look at your cash on hand when approving your mortgage loan.

Don't go on a career search. Lending Institutions look for a consistent career history on your application. Getting a new job before you start the application process for a mortgage may not get in the way of your approval at all. But for some, switching jobs during the mortgage loan application process could raise concern and stymie your approval.

Don't move finances around or change banks. As the lending institution considers your mortgage package, you will probably be required to provide bank statements for the last two or three months for your checking accounts, savings accounts, money market accounts and other liquid finances. Your lender is looking for a consistent rise and fall of your money each month, in order to avoid fraud. Switching banks or transferring finances elsewhere - no matter the reason - could make it harder for your lender to document your funds.

Don't give money directly to your seller (usually in cases of "for sale by owner") to be used as earnest money. Until closing, any good faith deposit actually belongs to you. The earnest money is to be applied to your expenses upon closing; some individual sellers might not understand this. Get a lawyer or other neutral person who can hang on to the funds or place them in a trust account until closing. If your home purchase fails, the contract with the seller should dictate to whom the earnest money should go.

Quantum Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (914) 287-2405.

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