Don't Trip Yourself Up While Buying A New Home

With the thrill an accepted offer brings and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. It's best to remember that until your keys are in hand, your lender is watching your accounts very closely. We have given you a list of things below to avoid when waiting for your loan to close.

Don't throw your money around. You may be tempted to buy that new sofa for the soon-to-be-your living room, but it's advisable to stay away from making large purchases like furniture, appliances, electronic equipment, or vacations until after your home loan closes. Financing new bedroom furniture with a store card or a bank credit card can put your creditworthiness at risk when you need it most. It's also a bad idea to make those huge purchases with cash. Lenders are examining your cash reserves when considering your loan.

Don't get a new job. Your recent work history should show stability. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are going to be making more money. However, if you switch careers before you qualify, your mortgage process could fail or be stalled. 

Don't take your accounts to a new bank or move around your money. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other accounts) will probably be studied as the lending institution makes decisions regarding your loan application. To eliminate potential fraud, most loans require a detailed paper trail to document all sources of all funds. No matter the purpose, moving banks or moving money from one account to another might raise a red flag with your lender and impede your approval process.

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 money is yours, not the seller's until the deal closes. Any good faith funds are to go toward your expenses upon closing; some FSBO sellers may not know this. It's advisable to put the money in a trust account or get a neutral party, like an attorney, to hold it until closing. The contract should specify to whom the funds go if the transaction does not go through.

We can answer questions about these "Don'ts" and many others. Give us a call: 973.249.7878