Don't Trip Yourself up While Buying a Home

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves the loan. Until your loan closes, there are still some hoops to jump through. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.

Don't empty your wallet on big-ticket items You may be tempted to buy that new easy-chair for the soon-to-be-yours den, but it's best to avoid making large buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Because lenders are examining your financial accounts, a large cash purchase is also a bad idea.

Don't get a new career. Lending Institutions like to see a consistent job history on your application. Finding a new job (particularly one with a better salary) may not affect your ability to qualify for a loan. However, getting a new job in the middle of the application process may affect your approval.

Don't take your accounts to a new bank or move around your money. While the lending institution reviews your mortgage loan application, you will likely be required to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid assets. To detect potential fraud, most loans require thorough paperwork to document the source of all incoming funds. No matter the purpose, moving banks or moving money from one account to another can raise a red flag with the lender and slow your qualification process.

Don't give funds directly to your seller (generally in cases of "for sale by owner") to be considered a "good faith" deposit. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Although your seller may not know this, the earnest money should be applied to your closing expenses. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until you close. The purchase agreement should dictate who gets the deposit if the transaction fails.

Patricia Kotz can walk you through the pitfalls of getting a mortgage. Call us at 970-984-2766.