Don't Trip Yourself up While Buying your New Home

What's more fun than buying a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before closing could be trouble. Keep in mind that until closing, your lender is watching you very closely. Here are some things to refrain from during the home buying process to be sure the transaction goes smoothly.

Don't overspend on big-ticket items You may be itching to order that new couch for the soon-to-be-yours den, but it's advisable to avoid making large buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Your lender may send up red flags if you purchase your furniture on your credit cards in the middle of your loan process. Since lending institutions are examining your bank accounts, a large cash purchase is also a mistake.

Don't go on a career search. Lenders look for a consistent career history on your paperwork. Finding a new career (especially one with a better paycheck) may not hinder your ability to qualify for a mortgage loan. However, if you switch careers before approval, your mortgage process could fail or be bogged down.

Don't move cash around or switch banks. Bank statements from recent months for your accounts (checking, savings, money market, and others) will likely be reviewed as the lending institution considers your application. In order to avoid fraud, lenders look for clear documentation of how you earn your living and where additional wealth comes from. No matter the reason, changing banks or transferring money can raise a red flag with the lender and slow your qualification process.

Don't hand over a "good faith" deposit 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 closing. Your earnest money is to go toward your expenses upon closing; a individual seller might not understand this. A neutral party, like an attorney can hang onto your deposit, or you may put it temporarily into a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be written in the contract with the seller.

Metro Mortgage can answer questions about these "Don'ts" and many others. Call us at 866-300-1550.