Things to avoid before buying a home

Many new homebuyers make the mistake of rushing out to buy things to fill their home with as soon as the seller accepts their purchase offer and the lender pre-approves their loan. But there are still a few major hurdles to overcome before the keys are handed out. Here are some things to avoid during the home buying process to assure your transaction goes as smoothly as possible:

• Don't make an expensive purchase. It may be tempting to order that new sofa for your soon-to-be living room, but its best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. Financing that furniture with a store credit card or even one of your own credit cards could jeopardize your credit worthiness during the time it means the most. Co-signing for a family member or friend is high risk in general, but during escrow is an especially bad time. Using cash to purchase big items can also create a problem because many banks take into consideration your cash reserve when approving your mortgage. As a general rule never apply for new credit until your loan closes.

• Don't quit your job. Lenders like to see a consistent job history. Changing jobs can definitely affect your ability to qualify for a mortgage loan - especially if you are switching lines or work or your pay structure changes. Getting a new job during the loan approval process can raise red flags in underwriting and affect your application. 

• Don't switch banks or move money around. As your lender reviews your loan package, you will likely be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds. Changing banks or transferring money to another account - even if its just to consolidate funds - could make it difficult for the lender to document your funds. Leave your money where it is, and when in doubt ask your loan officer.

• Don't give a good faith deposit directly to the seller in a FSBO purchase. As a rule, your good faith deposit belongs to you, not to the seller, until the deal closes. Your FSBO seller may not know that your good faith funds should be applied to your expenses at closing. Get an attorney or other neutral party such as an escrow company who can hold the deposit or put it in a trust account until you close on the home. Your purchase contract should dictate to whom the funds go should the transaction fall through. It is mandatory you understand where your deposit is and how it will be returned to you.

• Don't reveal information to the seller or their agent. Loose lips sink ships, but if you mention, say, what value the appraisal your lender ordered came in at, the seller could back out of the deal. Your buyer's agent has a fiduciary duty to act in your best interests; the seller's agent does not.

• Don't confuse ownership of the property. Until escrow is closed, your loan has funded, you are owner of public record and keys are in your hand, the seller still owns the house. Enormous legal liability can come from moving furniture in early or sending contractors to the home without the seller's consent. Of course, the seller will usually work something out. Always consult your buyer's agent in this type of situation.

• Don't disregard your lenders requirements. You may have been pre-approved for the loan but your work with the lender is far from over. In order to process your loan, you need to meet certain requirements. Your lender will need copies of your bank statements, W2s and other paperwork. It is up to you to get it to him or her as soon as possible. Escrow is a long, methodical process- time lost while your lender is waiting for information could cause you to be in breach of your contract and costly penalties. Failure to submit certain qualifying documents could cause your loan to be declined and loss of the financing you need to buy your home. Time is always of the essence.

• Don't hold back information. Even something as mundane as a bank overdraft could cause a hangup or delay in underwriting. If your lender asks for information, be as detailed and as thorough as possible. If there is a problem that will affect your purchase with your finances, credit or income, you have to tell your loan officer even if you are not comfortable with it.  If you do not, it will most likely come to light later and delay or decline your loan. Give your loan officer accurate information at the start and he will be able act in your best interests.

Loan Amount Home Value     Loan Program Requested     30 Year Fixed 15 Year Fixed 40 Year Fixed 25 Year Fixed 20 Year Fixed 10 Year Fixed 10 Year ARM 7 Year ARM 5 Year ARM 3 Year ARM 2 Year ARM 30 Year Fixed Interest Only 10 Year ARM Interest Only 7 Year ARM Interest Only 5 Year ARM Interest Only 3 Year ARM Interest Only Unsure-Need Advice First Name Last Name     Property Type     Single Family-Detached Townhouse Condo Duplex Triplex Quadplex 5+ Units Commercial Manufactured Home - Currently Unavailable Lot-Land Loan - Currently Unavailable Email     Zip code     Occupancy Type Work Phone Home Phone     Primary Residence Second Home Investment Property     Your Credit Rating First time homebuyer?     Credit Rating Over the Top - Over 740 Very Good - 720 to 739 Good - 700 to 719 Reasonable - 680 to 699 Fair - 660 to 679 Needs Some Work - 620 - 659 Needs Much Work - Below 620   Monthly Salary(household) $