Don't Trip Yourself up While Buying a New Home

What's better than buying a bunch of new stuff to go in your future home? Nothing. But making large purchases before closing could be trouble. Until your keys are in hand, there are still some hurdles to jump. Below you'll find a list of actions to avoid during this critical time of your home purchase.

Don't empty your wallet on big-ticket items You may be itching to buy that new easy-chair for the soon-to-be-yours living room, but it's advisable to avoid making major buys like furniture, appliances, jewelry, or cars until your home loan closes. Financing your 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 expensive items can even create an issue: most lenders look at your cash reserve when approving your mortgage loan.

Don't go on a career search. Your recent career history should show consistency. Getting a new job before you start the application process for a mortgage loan may not jeopardize your approval at all. But for some people, changing jobs during the mortgage application process might raise concern and hinder your application.

Don't switch banks or move cash around in your accounts. Your lending institution will require you to produce recent bank statements of all of your accounts: savings, checking, money market, and other liquid assets. To avoid potential fraud, most loans need a thorough paper trail to verify the source of all cash. Changing banks or transferring funds to another account - even if its merely to consolidate funds - may make it difficult for the lender to review your funds.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's up until the sale is final. Any earnest funds are to be used for your expenses upon closing; some sellers may not realize this. Get an attorney or other neutral party who can hold the funds or place them in a trust account until closing. If your sale falls through, your contract with the seller should specify where this earnest money should go.

Bob Rutledge Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 3149139678.