Trouble Factors – Avoiding Step Holes

Don’t Trip Yourself up While Buying your New Home

With the thrill that comes with an accepted offer and a “yes” from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until closing, your lender is watching your accounts very closely. Here are some things to refrain from before closing to assure your transaction goes well.

Don’t overspend 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 major purchases like furniture, cars, appliances, or vacations until closing. Using plastic to buy new living room furniture could jeopardize your lending process by distorting your numbers. Since lending institutions are examining your financial accounts, a large cash purchase is also not advised.

Don’t go on a job search. Stability in your job history is a good thing to lenders. Getting a new job before you apply for a mortgage may not jeopardize your approval at all. However, switching careers during the loan process might influence your approval.

Don’t change banks or move money around in your bank accounts. As the lending institution considers your mortgage package, you will probably be asked to produce bank statements for recent months on your checking and savings accounts, money market accounts and other liquid wealth. To detect fraud, lenders require a consistent portrayal of how you earn your living and where any additional money comes from. Changing banks or moving funds elsewhere – for whatever purpose – might make it difficult for your lender to verify your funds.

Don’t give money directly to your seller (generally in cases of “for sale by owner”) to be considered a “good faith” deposit. Until the sale is complete, any good faith deposit remains yours. Any good faith money is to go toward your expenses closing; some individual sellers might not understand this. It’s advisable to put the funds into a trust account, or get a neutral party, like an attorney to hold them until closing. The contract should specify who gets the deposit if the home purchase falls through.