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 soon after the seller says "yes" and the lender approves the loan. Until your keys are in hand, there are still some hurdles to jump. Here are some things to stay clear of before closing to be sure the transaction goes well.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to purchase big items can also be a mistake: most banks consider your available cash when approving your mortgage loan.

Don't go on a job search. Stability in your work 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, if you switch careers before your loan is approved, your loan process could fail or be slowed down.

Don't switch your accounts to a new bank or move around your finances. While the lender considers your loan package, you will probably be instructed to produce bank statements for the last two or three months on your checking accounts, savings accounts, money market accounts and other liquid assets. Your lending institution is looking for a consistent rise and fall of your funds each month, in the interest of avoiding fraud. No matter the purpose, moving banks or transferring money could raise a red flag with your lender and slow down your loan process.

Don't deliver a "good faith" deposit 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 closing. A FSBO seller might not know that your good faith money should go toward your expenses upon closing. Find an attorney or other neutral party who can hold the funds or place them in a trust account until you close. If your home purchase fails, the contract with the seller should specify to whom this good faith funds should go.

At Pacificwide Lending, we answer questions about this process every day. Give us a call at 9254610500.