Don't Trip Yourself up While Buying your New Home

Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves the loan. There still remain a few major hurdles to jump before closing. Here are some actions to stay clear of before closing to assure your transaction goes smoothly.

Don't empty your wallet on big-ticket items You may be tempted to buy that new sofa for the soon-to-be-yours parlor, but it's advisable to avoid making big ticket buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing new stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase expensive items can even be a mistake: many lending institutions look at your cash reserve when approving your application.

Don't get a new job. Consistency in your job history is a good thing to banks and other lenders. Finding a new job (particularly one with a bigger salary) may not hinder your ability to qualify for a mortgage. However, if you switch careers before approval, your process could fail or be bogged down.

Don't switch banks or move finances around in your bank accounts. As the lender considers your loan application, you will probably be asked to provide bank statements for the last two or three months for your checking accounts, savings accounts, money market accounts and other liquid assets. To detect potential fraud, most lending institutions need thorough paperwork to document the source of all funds. No matter the purpose, switching banks or moving funds from one account to another might raise a red flag with your lender and impede your application process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although some FSBO sellers may not know this, any good faith funds must go toward the buyer's closing expenses. You'll need to put the funds into a trust account, or get an attorney to hold them until the deal closes. Your contract should document who keeps the money if the home purchase falls through.

Executive Lending Group can answer questions about these "Don'ts" and many others. Call us at 4056158543.