Don't Trip Yourself up While Buying a New Home

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What's better than getting a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes can be an error. Keep in mind that until you get the keys, your lender is watching your finances very closely. Here are some things to avoid before closing to be sure the transaction goes well.

Don't buy big-ticket items. You may be tempted to order that new sofa for the soon-to-be-yours den, but it's best to avoid making major buys like furniture, appliances, jewelry, or cars until your home loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. Since lending institutions are examining your financial accounts, a large cash purchase is also a bad idea.

Don't go on a job search. Your recent work history should show consistency. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, switching careers in the middle of your application process may affect your approval.

Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for all of your accounts (checking, savings, money market, and other accounts) will probably be analyzed as the lending institution makes decisions regarding your approval. Your lending institution wants to see a consistent rise and fall of your funds over the month, in the interest of avoiding fraud. No matter the purpose, moving banks or transferring funds could raise a red flag with the lender and slow your qualification process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until closing, any earnest money actually belongs to you. Although your FSBO seller might not understand this, the earnest money should be used for the buyer's closing expenses. A neutral party, like an attorney can hold onto your funds, or you may put them temporarily into a trust account until you close. Should your home purchase fail, your purchase agreement should document where the earnest money should go.

At Anitatrummloans.com, we answer questions about this process every day. Give us a call: 303-596-8672.