Don't Trip Yourself up While Buying a New Home

With the thrill 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 appliance store. It's best to remember that until your keys are in hand, your lender is watching you very closely. Here are some actions to refrain from during the home buying process to assure your transaction goes well.

Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. It's also a red flag to make those large purchases with cash. Lenders are looking at your available cash when considering your loan.

Don't look for a new job. Lenders feel comfortable seeing a consistent job history on your paperwork. Getting a new career before you apply for a mortgage loan may not get in the way of your approval at all. But for some people, changing careers during the mortgage loan application process might raise concern and hinder your application.

Don't move money around or switch banks. Your lender will require you to produce recent bank statements for your accounts: checking, savings, money market, and other assets. To avoid fraud, lenders will need a clear and consistent picture of how you earn your money and where additional money comes from. Even for practical purposes, moving around funds or switching banks may make it harder for your lender to confirm your account history.

Don't give cash directly to your seller (generally in cases of "for sale by owner") for a "good faith" deposit. As a rule, your earnest money belongs to you, not the seller up until closing. Although your FSBO seller might not realize this, the good faith funds must go toward the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until closing. The contract should document who gets the earnest funds if the transaction does not go through.

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