Don't Trip Yourself up While Buying your New Home

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Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. Until closing, there are still some hoops to jump through. We have given you a list of things below we suggest you stay away from when waiting for your loan to close.

Don't throw your money around. Although you will be dreaming of ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Financing your 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. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.

Don't go on a career search. Stability in your career history is a positive thing to lenders. Getting a new career before you apply for a loan may not jeopardize your approval at all. But for some people, changing careers during the mortgage loan approval process might raise concern and affect your application.

Don't switch your accounts to a new bank or move around your money. As the lending institution considers your loan application, you will likely be required to produce bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid finances. To detect potential fraud, most lenders require a thorough paper trail to verify the source of all incoming funds. No matter the purpose, switching banks or moving money from one account to another could raise a red flag with the lender and slow down your approval process.

Don't give money directly to your seller (usually in cases of "for sale by owner") to be used as a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller may not know this, the good faith money must be applied to your closing expenses. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until closing. The final disposition of good faith funds, if your transaction falls through, should be documented in the purchase agreement with your seller.

All Size Loans can walk you through the pitfalls of getting a mortgage. Give us a call at (714) 457-5686.