Don't Trip Yourself up While Buying your Home

Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. There are still a few major hurdles to jump before the house is realy yours. We have listed some actions below you will want to avoid when waiting for your loan to close.

Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until the closing of your loan. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lenders are examining your financial accounts, a large cash purchase is also not advised.

Don't go on a job search. Stability in your work history is a good thing to lenders. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are improving your salary. However, if you switch careers before approval, your loan process could fail or be bogged down.

Don't switch banks or move cash around in your bank accounts. As your lending institution considers your mortgage loan package, you will probably be instructed to submit bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. In order to eliminate fraud, lenders require clear documentation of how you earn your living and where any additional money comes from. No matter the reason, switching banks or moving funds from one account to another could raise a red flag with your lender and impede your application process.

Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until closing. Although your seller might not understand this, the earnest money must be used for your closing expenses. Get a lawyer or other neutral person who can hang on to the funds or place them in a trust account until you close. If your transaction fails, your contract with the seller should specify to whom your earnest money should go.

Thomas Lotito
Advantage Home Lenders

Advantage Home Lenders can walk you through the pitfalls of getting a mortgage. Call us at (631) 736-0419.