Don't Trip Yourself up While Buying your New Home

What's more fun than buying a bunch of new furnishings to adorn your future home? Nothing. But making big ticket purchases before closing can be an error. Until the keys are handed over, there are still some hurdles to jump. Here are some things to avoid during the home buying process to be sure your transaction goes well.

Don't buy luxury items. You may be tempted to order that new sofa for the soon-to-be-yours living room, but it's advisable to stay away from making major buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase big-ticket items can even be a bad idea: many lenders take into consideration your cash reserve when approving your loan.

Don't get a new job. Your recent job history should show consistency. Finding a new career (especially one with a better paycheck) may not affect your ability to qualify for a loan. However, if you switch careers before you qualify, your process could fail or be slowed down.

Don't switch banks or move cash around in your bank accounts. While the lending institution reviews your mortgage loan application, you will probably be required to provide bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid wealth. The lending institution looks for a steady flow of your money each month, in the interest of ruling out fraud. Switching banks or transferring money elsewhere - no matter the reason - may hinder the documentation of your accounts.

Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the earnest money actually belongs to you. Some sellers may not realize that these good faith funds must go toward your expenses upon closing. Find a lawyer or other neutral person who will hang on to the money or place it in a trust account until closing. Your purchase contract should specify who gets the deposit if the transaction fails.

Financial Edge Mortgage Corp. can walk you through the pitfalls of getting a mortgage. Call us at 425-508-9988.

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