Don't Trip Yourself up While Buying a Home

What's more fun than getting a bunch of new stuff to adorn your future home? Not much. But making large purchases before closing can be an error. There still remain a few major hurdles to jump before closing. We have given you a list of things below we suggest you stay away from when waiting for closing.

Don't buy luxury items. Although you may be listing ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until the closing of your loan. Using credit cards to buy furniture could compromise your loan process by changing your numbers dramatically. It's also a mistake to make those big-ticket purchases using cash. Lenders are examining your cash reserve when considering your loan.

Don't get a new job. Your recent work history should show consistency. Getting a new job before you apply for a loan may not compromise your approval at all. However, if you switch careers before approval, your process could fail or be stalled.

Don't move finances around or switch banks. Bank statements from recent months for all of your accounts (savings, checking, money market, and other assets) will be analyzed as the lending institution makes decisions regarding your mortgage application. To detect fraud, lenders look for a clear and consistent picture of how you earn your living and where any additional funds come from. No matter the purpose, changing banks or moving funds from one account to another could raise a red flag with the lender and slow down your approval process.

Don't give funds directly to your seller (commonly in the case of of "for sale by owner") to be considered a "good faith" deposit. As a rule, your good faith money is yours, not the seller's up until the deal closes. Any earnest funds are to go toward your expenses closing; some FSBO sellers might not understand this. We recommend that you put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until closing. The disposition of good faith money, if your transaction fails, should be specified in the purchase agreement with the seller.

ADVISORY MORTGAGE can walk you through the pitfalls of getting a mortgage. Give us a call at 8102292820.