Don't Trip Yourself up While Buying a Home

What's more fun than buying a bunch of new stuff to go in your future home? Not much. But making big purchases before closing could be trouble. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Here are some actions to refrain from before closing to assure your transaction goes well.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. It's also a red flag to make those big-ticket purchases with cash. Lenders are looking at your cash reserve when considering your loan.

Don't go on a job search. Your recent career history should show consistency. Changing jobs may not compromise your ability to qualify for a loan - especially if you are going to be making more money. However, switching careers during the application process could influence whether or not you are approved.

Don't take your accounts to a new bank or move around your cash. While the lender reviews your mortgage package, you will probably be required to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid finances. To detect potential fraud, most lending institutions require a detailed paper trail to verify the source of all funds. Even for innocent reasons, transferring money or switching banks might make it more difficult for your lending institution to document your bank history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your earnest money belongs to you, not to the seller until the sale is final. Your seller may not know that any good faith funds is to go toward your expenses upon closing. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the deal closes. If your sale falls through, your contract with the seller should dictate where this earnest money should go.

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