Don't Trip Yourself up While Buying a Home

What's more fun than buying a bunch of new furniture to go in your future home? Not much. But making big purchases before your loan closes can be an error. There are still a few major hurdles to jump before the keys are handed over. Here are some things to avoid before closing to be sure your transaction goes smoothly.

Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's even a red flag to make those large purchases using cash. Lenders are examining your cash on hand when considering your loan.

Don't look for a new job. Your recent career history should show stability. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, if you switch careers before your loan is approved, your process could fail or be slowed down.

Don't switch your accounts to a new bank or move around your finances. While your lender reviews your mortgage loan application, you will probably be instructed to provide bank statements for the last two or three months for your saving and checking accounts, money market funds and other liquid finances. Your lending institution looks for a steady flow of your funds each month, in order to avoid fraud. Changing banks or moving money to another account - for whatever reason - could hinder the documentation of your accounts.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit belongs to you, not the seller up until the deal closes. Although your FSBO seller may not understand this, the good faith funds must be used for your closing expenses. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be specified in the contract with the seller.

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