Things Not to Do Before Purchasing a Home

Real Estate Agent with Houlihan Lawrence, Inc

Here are a few tips that home buyers need to know what to do and NOT do before buying a home:

No Major Purchase of Any Kind

No major purchase that would create debt of any kind. This includes furniture, appliances, electronic equipment, jewelry, vacations, expensive weddings...

...and automobiles, of course.

Don't Move Money Around

When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.

If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them.

The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious.

Perhaps you become exasperated at your lender, but they are only doing their job correctly. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving your money around, even if you are consolidating your funds to make it "easier," could make it more difficult for the lender to properly document.

So leave your money where it is until you talk to a loan officer.

Oh...don't change banks, either.

Should You Change Jobs?

For most people, changing employers will not really affect your ability to qualify for a mortgage loan, especially if you are going to be earning more money.  For some homebuyers, however, the effects of changing jobs can be disastrous to your loan application.

These are some basic rules that you can't forget to adhere to.

Comments (2)

Eddy Martinez
Nationwide Funding Group - Highland Park, CA
 once in the middle of a purchase a customer decided to buy a minivan for some strange reason ... in cash!!!!!! luckily i had given the underwriter his statment for his 401k so his loan funded. talk about dogging a bullet! 
Dec 14, 2006 04:34 PM
Nima Rezvan CT Lender CT Senior Mortgage Broker
Nima Rezvan Prosper First Funding Corporation NMLS#110681 - Fairfield, CT
First Time Home Buyer Expert - CT FHA Loans - FHA
Well we need 2 years of employments history and you shouldn't have anyone switch from a W-2 occupation to a self-employment.  Am I right?
Dec 14, 2006 05:41 PM