Don't Trip Yourself up While Buying a New Home

What's better than buying a bunch of new stuff to adorn your future home? Nothing. But buying big ticket items before your loan closes can be a misstep. It's wise to remember that until your keys are in hand, your lender is watching your finances very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Since lenders are reviewing your bank accounts, a large cash purchase is also not advised.

Don't get a new job. Your recent job history should show consistency. Finding a new career (especially one with a bigger salary) may not affect your ability to qualify for a mortgage loan. But for some people, changing careers during the mortgage loan approval process may bring concern and hinder your application.

Don't change banks or move cash around in your bank accounts. Your lending institution will ask for recent bank statements for all of your accounts: checking, savings, money market, and other liquid assets. To avoid potential fraud, most lending institutions need a detailed paper trail to determine the source of all cash. No matter the reason, switching banks or moving money from one account to another may raise a red flag with your lender and slow down your qualification process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. The FSBO seller may not realize that your good faith funds should go toward your expenses upon closing. Get a lawyer or other neutral party who can hold the deposit or put it in a trust account until closing. The disposition of good faith funds, if your home purchase fails, should be included in the purchase agreement with your seller.

Tenby J. Dahman The Dahman Team can answer questions about these "Don'ts" and many others. Call us at 3038627760.