Don't Trip Yourself up While Buying your New Home

What's better than buying a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until the keys are handed over, there are still some hoops to jump through. Below you'll find a list of things to stay away from during this critical time of your home purchase.

Don't buy luxury items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Because lenders are perusing your bank accounts, a large cash purchase is also not advised.

Don't look for a new career. Consistency in your career history is a good thing to banks and other lenders. Finding a new job (particularly one with a bump in salary) may not jeopardize your ability to qualify for your mortgage. However, switching jobs in the middle of the loan process may affect whether or not you are approved.

Don't switch banks or move cash around in your bank accounts. Most lenders will ask for recent bank statements for your accounts: savings, checking, money market, and other liquid assets. The lending institution hopes to see a consistent rise and fall of your funds each pay period, in the interest of ruling out fraud. Even for practical purposes, moving around money or switching banks could make it more difficult for your lending institution to confirm your account history.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith money remains yours. Although your FSBO seller may not realize this, the earnest money should be applied to the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. Your purchase agreement should document who keeps the deposit if the transaction does not go through.

Metro Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at 866-300-1550.