Don't Trip Yourself up While Buying a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before closing. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't buy big-ticket items. Although you will be dreaming of ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Financing new 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 even create a bad idea: most lenders take into consideration your cash reserve when approving your mortgage.

Don't go on a job search. Lending Institutions look for a consistent career history on your application. Getting a new job before you apply for a mortgage may not get in the way of your approval at all. However, if you switch careers before you qualify, your loan process could fail or be slowed down.

Don't switch banks or move cash around in your bank accounts. Bank statements from recent months for your accounts (savings, checking, money market, and other accounts) will probably be reviewed as the lender makes decisions regarding your mortgage application. Your lending institution hopes to see a consistent rise and fall of your money over the month, in order to rule out fraud. No matter the reason, switching banks or moving funds from one account to another could raise a red flag with your lender and slow your qualification process.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it remains yours until closing. Your good faith funds are to be used for your expenses upon closing; a individual seller might not realize this. Find an attorney or other neutral person who can hang on to the money or put it in a trust account until closing. Your contract should indicate who keeps the deposit if the transaction falls through.

At Firelight Mortgage Consultants, we answer questions about this process every day. Call us at 7209331025.