Don't Trip Yourself up While Buying a Home

What's more fun than getting a bunch of new furnishings to go in your future home? Nothing. But making big purchases before your loan closes could be trouble. Keep in mind that until you get the keys, your lender is watching you very closely. We have listed some things below we suggest you avoid when waiting for closing.

Don't overspend on big-ticket items It may be tempting to order that new Turkish rug for the soon-to-be-yours living room, but it's best to avoid making major buys like furniture, appliances, jewelry, or vacations until closing. Financing your bedroom 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 buy big items can also be a mistake: many lenders take into consideration your available cash when approving your loan.

Don't go on a job search. Consistency in your job history is a good thing to lending institutions. Getting a new job before you start the application process for a mortgage may not compromise your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.

Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for all of your accounts (savings, checking, money market, and other assets) will be reviewed as the lender makes decisions regarding your approval. To avoid fraud, lenders want to see a consistent portrayal of how you earn your money and where additional money comes from. Even for practical reasons, moving around cash or switching banks could make it harder for your lender to verify your bank history.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith money remains yours. Although some individual sellers might not understand this, any good faith money must be applied to the buyer's closing expenses. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until you close. The purchase contract should specify to whom the funds go if the transaction does not go through.

Metro Mortgage can answer questions about these "Don'ts" and many others. Give us a call: 866-300-1550.