Don't Trip Yourself up While Buying a New Home

Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves their loan. There still remain a few major hurdles to jump before your loan closes. We have listed some things below you will want to stay away from when waiting for your loan to close.

Don't throw your money around. It may be tempting to order that new Turkish rug for the soon-to-be-yours living room, but it's advisable to stay away from making big ticket buys like furniture, appliances, electronic equipment, or vacations until closing. Using credit cards to buy furniture could jeopardize your loan process by distorting your numbers. Using cash to purchase big-ticket items can also create a problem: many lenders look at your available cash when approving your mortgage.

Don't look for a new job. Consistency in your work history is a good thing to banks and other lenders. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, switching jobs in the middle of the loan process might affect whether or not you are approved.

Don't switch banks or move cash around in your bank accounts. Your lender will ask for recent bank statements of all of your accounts: savings, checking, money market, and other assets. To detect potential fraud, most lenders require a detailed paper trail to document the source of all funds. Switching banks or transferring finances elsewhere - for whatever purpose - may hinder the documentation of your funds.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your earnest money does not belong to the seller: it remains yours until the sale closes. Your good faith funds are to go toward your expenses upon closing; some sellers might not understand this. An attorney or other type of neutral party can hold your funds, or you may place them temporarily into a trust account until closing. Your purchase contract should specify where the funds go if the transaction does not go through.

Metro Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 866-300-1550.