Don't Trip Yourself up While Buying your New Home

What's better than getting a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before closing can be an error. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Here are some actions to avoid during the home buying process to assure the transaction goes well.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy furniture could compromise your lending process by altering your numbers dramatically. Since lending institutions are perusing your financial accounts, a large cash purchase is also not advised.

Don't go on a career search. Stability in your career history is a good thing to lenders. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, finding a new career in the middle of the approval process might affect your approval.

Don't take your accounts to a new bank or move around your finances. As your lender considers your mortgage loan package, you will likely be asked to submit bank statements for recent months on your checking accounts, savings accounts, money market funds and other liquid assets. To detect fraud, lenders look for a clear and consistent picture of how you earn your money and where additional wealth comes from. No matter the reason, changing banks or moving funds from one account to another may raise a red flag with the lender and slow your application process.

Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith deposit remains yours. Although some individual sellers may not understand this, your earnest money should go toward your closing expenses. It's best to put the money into a trust account, or get an attorney to hold it until closing. The contract should dictate where the money goes if the home purchase falls through.

Mission Home Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (619) 688-0011.

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