Don't Trip Yourself up While Buying a New Home

Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. There are still a few major hurdles to jump before closing. Here are some actions to refrain from before closing to assure the transaction goes smoothly.

Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your lender may send up red flags if you finance your furniture on your credit cards in the middle of your loan process. Using cash to buy big items can even be an issue: most lending institutions consider your cash reserve when approving your application.

Don't get a new career. Stability in your career history is a good thing to lenders. Finding a new job (particularly one with a bump in salary) may not jeopardize your ability to qualify for a loan. But for some people, changing careers during the mortgage loan application process might raise concern and hinder your approval.

Don't switch banks or move money around in your bank accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will be reviewed as the lender considers your loan application. Your lending institution looks for a steady rise and fall of your money over the month, in the interest of ruling out fraud. Changing banks or moving funds to another account - no matter the purpose - might make it difficult for your lender to verify your funds.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until the deal closes. Your good faith funds are to go toward your expenses closing; some individual sellers might not understand this. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until you close. The disposition of earnest funds, in the case of a failed transaction, should be included in the purchase agreement with your seller.

At Advantage Home Lenders, we answer questions about this process every day. Call us: 6317360419.