Don't Trip Yourself up While Buying a Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. It's wise to remember that until closing, your lender is watching your accounts very closely. Here are some things to avoid before closing to assure the transaction goes smoothly.

Don't buy luxury items. Although you will be planning ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and car purchases until your loan closes. You may send up red flags with your lender if you buy your furniture on your credit cards during your loan process. Since lending institutions are examining your bank accounts, a large cash purchase is also not advised.

Don't go on a job search. Lending Institutions like to see a consistent job history on your application forms. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are going to be making more money. But for some people, changing jobs during the loan approval process could bring concern and stymie your approval.

Don't take your accounts to a new bank or move around your cash. Most lenders will require you to submit recent bank statements of accounts in your name: savings, checking, money market, and other liquid assets. To eliminate potential fraud, most loans want thorough paperwork to determine the source of all incoming funds. No matter the reason, moving banks or moving money from one account to another could raise a red flag with your lender and slow down your loan process.

Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith money does not belong to the seller: it remains yours until the sale closes. Your seller might not realize that these good faith funds must go toward your expenses at closing. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until closing. Your contract should dictate who keeps the earnest funds if the transaction does not go through.

Pacificwide Lending can answer questions about these "Don'ts" and many others. Give us a call at 9254610500.