Don't Trip Yourself up While Buying a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.

Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you finance new appliances on your credit cards in the middle of your loan process. Because lending institutions are examining your financial accounts, a large cash purchase is also not advised.

Don't look for a new job. Consistency in your work history is a good thing to banks and other lenders. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are going to be making more money. But in some cases, getting a new career during the mortgage loan approval process might bring concern and hinder your approval.

Don't move cash around or switch banks. Most lenders will require you to submit recent bank statements for accounts in your name: checking, savings, money market, and other assets. In order to eliminate fraud, lenders want to see clear documentation of how you earn your money and where additional money comes from. Switching banks or transferring funds elsewhere - no matter the reason - may make it difficult for your lender to review your funds.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until closing, the good faith deposit actually belongs to you. Although some FSBO sellers might not understand this, your good faith funds must go toward your closing expenses. You'll need to put the funds into a trust account, or get a neutral party, like a lawyer to hold them until closing. Your contract should document who gets the deposit if the home purchase does not go through.

Patricia Kotz can answer questions about these "Don'ts" and many others. Call us: 970-984-2766.