Don't Trip Yourself up While Buying a Home

What's better than getting a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. There are still a few major hurdles to jump before the house is realy yours. Here are some things to refrain from before closing to assure the transaction goes smoothly.

Don't buy luxury items. It may be tempting to order that new easy-chair for the soon-to-be-yours den, but it's advisable to stay away from making big ticket buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's even a mistake to make those big purchases with cash. Lending Institutions are examining your available cash when considering your loan.

Don't look for a new career. Lending Institutions feel comfortable seeing a consistent career history on your application forms. Finding a new career (particularly one with a better paycheck) may not hinder your ability to qualify for your loan. But for some, changing jobs during the mortgage application process could bring concern and stymie your application.

Don't change banks or move cash around in your accounts. As the lender considers your mortgage package, you will likely be required to produce bank statements for recent months on your saving and checking accounts, money market funds and other liquid assets. To avoid potential fraud, most loans require a thorough paper trail to document the source of all incoming funds. Even for innocent purposes, moving around funds or switching banks could make it difficult for your lending institution to document your account history.

Don't give earnest money 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. Your seller might not know that this good faith money is to go toward your expenses upon closing. Get a lawyer or other neutral person who will hold the funds or put them in a trust account until closing. The disposition of good faith money, if your sale fails, should be included in the contract with the seller.

Donald Stiefer can answer questions about these "Don'ts" and many others. Call us at 5806959369.

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