Things to Avoid While Buying a New Home

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't overspend on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase big items can also create a problem: most banks consider your cash reserve when approving your mortgage loan.

Don't go on a career search. Lending Institutions feel comfortable seeing a consistent career history on your paperwork. Getting a new job before you start the application process for a mortgage loan may not jeopardize your approval at all. But for some, getting a new career during the mortgage loan approval process might bring concern and affect your application.

Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for your accounts (savings, checking, money market, and others) will probably be analyzed as the lending institution makes decisions regarding your loan application. To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds. No matter the reason, moving banks or transferring money can raise a red flag with your lender and slow down your application process.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any earnest money actually belongs to you. The earnest funds are to go toward your expenses upon closing; some sellers might not know this. It's best to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. Should your home purchase fail, the purchase agreement should dictate where the good faith deposit should go.

The Reen Team at Direct Mortgage Funding can walk you through the pitfalls of getting a mortgage. Give us a call: 4086261879.