Don't Trip Yourself up While Buying your New Home

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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. It's wise to remember that until closing, your lender is watching your finances very closely. 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 living room into a home magazine cover, or celebrate your new dream home, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's even a bad idea to make those big-ticket purchases with cash. Lenders are examining your cash reserve when considering your loan.

Don't go on a job search. Consistency in your job history is a positive thing to lenders. Finding a new job (particularly one with a bump in salary) may not change your ability to qualify for a mortgage loan. However, finding a new career during the loan process may affect whether or not you are approved.

Don't switch your accounts to a new bank or move around your finances. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will probably be reviewed as the lender considers your loan application. The lender looks for a steady flow of your funds over the pay period, in order to avoid fraud. Changing banks or moving funds to another account - no matter the reason - could make it harder for your lender to document your funds.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith money actually belongs to you. Any good faith money is to be used for your expenses upon closing; some FSBO sellers might not understand this. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. Should your home purchase fail, your contract with the seller should indicate where this earnest money should go.

All Inc. can walk you through the pitfalls of getting a mortgage. Call us at 415-731-3100.