Don't Trip Yourself up While Buying your Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before the house is realy yours. Here are some actions to avoid before closing to be sure the transaction goes smoothly.

Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from big purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Because lending institutions are examining your financial accounts, a large cash purchase is also a bad idea.

Don't look for a new job. Lending Institutions look for a consistent career history on your application. Finding a new job (particularly one with a bump in salary) may not change your ability to qualify for a mortgage loan. However, if you switch careers before approval, your process could fail or be stalled.

Don't switch your accounts to a new bank or move around your finances. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will be analyzed as the lender considers your loan application. In order to avoid fraud, lenders want to see a clear and consistent picture of how you earn your living and where additional funds come from. Switching banks or moving money to another account - even if its just to consolidate funds - might make it harder for your lender to review your funds.

Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit actually belongs to you. Your FSBO seller may not know that your earnest money is to be applied to your expenses at closing. An attorney or other type of neutral party can hold onto your deposit, or you may put it temporarily into a trust account until closing. Your contract should dictate where the funds go if the home purchase does not go through.

At Patricia Kotz, we answer questions about this process every day. Call us: 970-984-2766.