Don't Trip Yourself up While Buying a Home

Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. It's best to remember that until you get the keys, your lender is watching your accounts very closely. We have given you a list of things below you will want to stay away from when waiting for your loan to close.

Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your lender may send up red flags if you finance new furniture on your credit cards in the middle of your loan process. Using cash to buy big items can even be a bad idea: many lenders consider your available cash when approving your loan.

Don't go on a job search. Your recent job history should show consistency. Finding a new job (especially one with a bigger paycheck) may not hinder your ability to qualify for a loan. However, if you switch careers before your loan is approved, your loan process could fail or be slowed down.

Don't move cash around or switch banks. As the lending institution reviews your mortgage application, you will probably be asked to provide bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid finances. To eliminate potential fraud, most lenders want a thorough paper trail to document the source of all cash. No matter the reason, changing banks or transferring funds might raise a red flag with the lender and slow your approval process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your earnest money is yours, not the seller's up until closing. Your FSBO seller might not realize that any good faith money is to be applied to your expenses at closing. An attorney or other type of neutral party can hold onto your earnest money, or you may put it temporarily into a trust account until you close. The purchase contract should dictate to whom the funds go if the transaction fails.

Citywide Group can answer questions about these "Don'ts" and many others. Call us: 949-200-3800

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