Things to Avoid While Purchasing a New Home

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What's better than buying a bunch of new furnishings to go in your future home? Not much. But making big ticket purchases before closing can be harmful. It's wise to remember that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't buy big-ticket items. You may be tempted to buy that new couch for the soon-to-be-yours living room, but it's advisable to stay away from making major buys like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Using cash to buy expensive items can even create an issue: many lending institutions consider your available cash when approving your application.

Don't go on a career search. Your recent career history should show stability. Getting a new career before you start the application process for a mortgage may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.

Don't move cash around or switch banks. While your lending institution considers your loan application, you will probably be asked to provide bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid assets. To avoid potential fraud, most lending institutions need thorough paperwork to document the source of all cash. Changing banks or moving money elsewhere - no matter the reason - might hinder the review of your accounts.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until closing. Your earnest money is to be used for your expenses closing; some individual sellers might not know this. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until you close. The final disposition of earnest money, if your transaction fails, should be specified in the contract with the seller.

G & M Wolkenberg Inc. can answer questions about these "Don'ts" and many others. Give us a call: 516 536-2525.