Don't Trip Yourself up While Buying a New Home

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Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. It's wise to remember that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't overspend on big-ticket items Although you may be planning ways to turn your new home into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. Using plastic to buy new living room furniture could compromise your lending process by distorting your numbers. It's even a bad idea to make those huge purchases using cash. Lenders are looking at your cash reserve when considering your loan.

Don't go on a job search. Stability in your work history is a good thing to lending institutions. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are going to be making more money. But in some cases, switching jobs during the mortgage application process might raise concern and hinder your application.

Don't move cash around or change banks. As your lending institution considers your mortgage application, you will probably be asked to submit bank statements for the last two or three months on your checking accounts, savings accounts, money market accounts and other liquid finances. To eliminate potential fraud, most loans need thorough paperwork to determine the source of all funds. Even for practical reasons, moving around money or changing banks might make it harder for your lender to verify your bank history.

Don't give money directly to your seller (usually in the case of of "for sale by owner") to be used as earnest money. Your good faith deposit does not belong to the seller: it remains yours until closing. Any good faith money is to go toward your expenses closing; some individual sellers may not know this. An attorney or other type of neutral party can hold your earnest funds, or you may put them temporarily into a trust account until closing. If your home purchase fails, your contract with the seller should indicate where the good faith funds should go.

Your Professional Mortgage Team is here to walk you through the pitfalls of getting a mortgage. Give us a call at 919-676-1111.