Things to Avoid While Buying a New Home

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. It's wise 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 stay away from during this critical time of your home purchase.

Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from major purchases like furniture, cars, appliances, or vacations until closing. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Because lending institutions are looking closely at your bank accounts, a large cash purchase is also a bad idea.

Don't go on a job search. Stability in your work history is a positive thing to banks and other lenders. Getting a new career before you start the application process for a mortgage may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.

Don't move cash around or switch banks. Your lending institution will instruct the submission of recent bank statements for your accounts: savings, checking, money market, and other assets. To avoid potential fraud, most lenders need detailed paperwork to document the source of all cash. Switching banks or moving money to another account - even if its only to pool funds - might hinder the review of your funds.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller may not understand this, the good faith funds must be applied to the buyer's closing expenses. Get a lawyer or other neutral party who is able to hang on to the deposit or place it in a trust account until you close. The purchase agreement should indicate where the funds go if the home purchase fails.

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

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