Things to Avoid While Buying a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until closing, your lender is watching your accounts very closely. Here are some actions to stay clear of during the home buying process to assure the transaction goes smoothly.

Don't overspend on big-ticket items Although you may be planning ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until the closing of your loan. Using plastic to buy furniture could jeopardize your loan process by changing your numbers dramatically. Using cash to purchase big-ticket items can also create an issue: many lenders look at your cash reserve when approving your mortgage loan.

Don't go on a career search. Lenders like to see a consistent work history on your application. Getting a new job before you apply for a mortgage loan may not jeopardize your approval at all. But in some cases, getting a new career during the mortgage loan application process might raise concern and stymie your approval.

Don't move cash around or switch banks. As your lending institution considers your mortgage package, you will probably be required to produce bank statements for recent months on your saving and checking accounts, money market accounts and other liquid finances. To eliminate potential fraud, most lenders want detailed paperwork to verify the source of all incoming funds. Switching banks or transferring funds elsewhere - for whatever reason - could hinder the review of your funds.

Don't deliver a "good faith" deposit 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 deal closes. Some sellers may not know that this earnest money should go toward your expenses upon closing. You'll need to put the funds into a trust account, or get a neutral party, like a lawyer to hold them until closing. The purchase contract should specify who gets the money if the transaction fails.

At Mortgage Headquarters of Missouri, Inc, we answer questions about this process every day. Give us a call at 5733029990.