Don't Trip Yourself up While Buying a New Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. Until closing, there still remain some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't make expensive purchases. Although you may be listing ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until your loan closes. Using credit cards to buy furniture could compromise your loan process by altering your numbers dramatically. It's even a red flag to make those big purchases with cash. Lenders are examining your cash on hand when considering your loan.

Don't look for a new career. Consistency in your career history is a good thing to lenders. Getting a new job before you apply for a loan may not get in the way of your approval at all. However, finding a new job during the loan process could affect whether or not you are approved.

Don't move finances around or change banks. Bank statements from the last few months for all of your accounts (savings, checking, money market, and others) will probably be studied as the lender considers your application. Your lender wants to see a consistent flow of your money over the month, in the interest of avoiding fraud. Even for practical purposes, moving around cash or changing banks might make it harder for the lending institution to confirm your bank history.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Although some FSBO sellers may not realize this, any good faith funds must be used for your closing expenses. Get a lawyer or other neutral person who is able to hang on to the funds or place them in a trust account until closing. The final disposition of good faith funds, in the case of a failed transaction, should be indicated in the contract with your seller.

At The Reen Team at Direct Mortgage Funding, we answer questions about this process every day. Call us at 4086261879.