Don't Trip Yourself up While Buying a New Home

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. Until closing, there are still some hoops to jump through. Below you'll find a list of actions to stay away from during this critical time of your home purchase.

Don't overspend on big-ticket items You may be tempted to order that new easy-chair for the soon-to-be-yours den, but it's best to stay away from making major buys like furniture, appliances, jewelry, or cars until closing. Your lender may send up red flags if you purchase your appliances on your credit cards during your loan process. Using cash to buy big-ticket items can also create a bad idea: most lending institutions consider your available cash when approving your loan.

Don't go on a career search. Stability in your work history is a positive thing to banks and other lenders. Getting a new career before you apply for a loan may not jeopardize your approval at all. However, switching jobs during your approval process may influence your approval.

Don't move finances around or switch banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other accounts) will be analyzed as the lender makes decisions regarding your application. To eliminate potential fraud, most lending institutions want a thorough paper trail to determine the source of all cash. Even for practical reasons, moving around finances or changing banks could make it harder for your lending institution to document your bank history.

Don't give money directly to your seller (usually in cases of "for sale by owner") for earnest money. Your good faith money does not belong to the seller: it is actually yours until closing. Some FSBO sellers might not know that your good faith funds should go toward your expenses upon closing. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until you close. The disposition of good faith funds, if your home purchase falls through, should be documented in the contract with your seller.

Firelight Mortgage Consultants can walk you through the pitfalls of getting a mortgage. Call us at 3032282254.