Don't Trip Yourself up While Buying a Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. Until the house is really yours, there are still some hoops to jump through. Below you'll find a list of things to avoid during this crucial time of your home purchase.

Don't empty your wallet 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. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Financing new furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to purchase big items can even create an issue: most lenders take into consideration your available cash when approving your application.

Don't go on a career search. Your recent work history should show stability. Finding a new career (especially one with a better paycheck) may not hinder your ability to qualify for your loan. However, switching jobs in the middle of the approval process might influence your approval.

Don't move finances around or change banks. As the lending institution reviews your mortgage loan package, you will probably be asked to submit bank statements for recent months on your saving and checking accounts, money market accounts and other liquid wealth. To eliminate fraud, lenders will need clear documentation of how you earn your money and where any additional wealth comes from. No matter the purpose, switching banks or moving funds from one account to another may raise a red flag with the lender and slow down your approval process.

Don't give cash directly to your seller (generally in the case of of "for sale by owner") for a "good faith" deposit. As a rule, your earnest money belongs to you, not to the seller until the deal closes. Although your FSBO seller might not realize this, the earnest money must go toward the buyer's closing expenses. Get an attorney or other neutral person who can hold the deposit or place it in a trust account until you close. Your purchase agreement should specify who gets the earnest funds if the home purchase falls through.

Mortgage Headquarters of Missouri, Inc can answer questions about these "Don'ts" and many others. Call us: 5733029990.