Don't Trip Yourself up While Buying your Home

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Here are some things to avoid before closing to assure your transaction goes well.

Don't buy luxury items. Although you will be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until your loan closes. Using credit cards to buy new living room furniture could compromise your lending process by distorting your numbers. It's even a red flag to make those big purchases using cash. Lenders are examining your cash reserve when considering your loan.

Don't get a new job. Lenders like to see a consistent work history on your application forms. Finding a new job (particularly one with a bump in salary) may not hinder your ability to qualify for your loan. However, if you switch careers before approval, your mortgage process could fail or be slowed down.

Don't switch your accounts to a new bank or move around your money. While the lending institution reviews your mortgage loan application, you will probably be required to submit bank statements for the last few months for your checking and savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most lending institutions require a thorough paper trail to document the source of all incoming funds. Changing banks or transferring money to another account - for whatever reason - may make it difficult for your lender to review your funds.

Don't give cash directly to your seller (generally in cases of "for sale by owner") for earnest money. As a rule, your good faith deposit is yours, not the seller's up until closing. Any good faith money is to be applied to your expenses upon closing; some individual sellers may not know this. Find a lawyer or other neutral party who can hang on to the funds or put them in a trust account until closing. Should your home purchase fail, your purchase contract should document to whom this earnest money should go.

Metro Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 866-300-1550.