Don't Trip Yourself up While Buying a New Home

What's better than getting a bunch of new furniture to go in your future home? Nothing. But making large purchases before closing can be harmful. There still remain a few major hurdles to jump before closing. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. Financing new stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's also a red flag to make those big-ticket purchases using cash. Lenders are looking at your cash reserve when considering your loan.

Don't look for a new career. Stability in your job history is a good thing to banks and other lenders. Finding a new job (particularly one with a bump in salary) may not hinder your ability to qualify for a loan. However, switching jobs during the loan process could influence your approval.

Don't change banks or move cash around in your accounts. As your lending institution reviews your mortgage package, you will probably be required to produce bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid finances. Your lender is looking for a steady flow of your money each pay period, in order to avoid fraud. No matter the purpose, moving banks or moving funds from one account to another can raise a red flag with your lender and slow down your application process.

Don't give money directly to your seller (commonly in cases of "for sale by owner") to be considered earnest money. As a rule, your good faith deposit is yours, not the seller's until the sale is final. Although your FSBO seller might not realize this, the good faith funds should be applied to your closing expenses. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. If your sale falls through, your contract with the seller should document to whom the earnest money should go.

At U.S.A. Lending, Inc., we answer questions about this process every day. Give us a call: 305-967-7200.