Don't Trip Yourself up While Buying your New Home

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. It's best to remember that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't overspend 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, jewelry, appliances, or vacations until closing. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to purchase expensive items can also be a mistake: many banks take into consideration your cash reserve when approving your loan.

Don't get a new job. Stability in your career history is a positive thing to lenders. Getting a new career before you apply for a loan may not compromise your approval at all. But in some cases, switching jobs during the mortgage loan approval process may bring concern and affect your application.

Don't take your accounts to a new bank or move around your finances. Your lending institution will require you to submit recent bank statements for all of your accounts: savings, checking, money market, and other assets. To detect potential fraud, most lending institutions want thorough paperwork to determine the source of all incoming funds. Even for practical purposes, transferring funds or changing banks may make it more difficult for your lending institution to document your bank history.

Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until the completion of the deal, the good faith money remains yours. Although your seller may not realize this, your earnest money must go toward the buyer's closing expenses. It's advisable to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. The final disposition of good faith money, if your transaction fails, should be indicated in the contract with the seller.

At REDDISH BULL FINANCE, INC. | NMLS #1247892, we answer questions about this process every day. Call us: 561-475-2281.