Don't Trip Yourself up While Buying your Home

What's better than getting a bunch of new furniture to go in your future home? Not much. But buying big ticket items before your loan closes could be trouble. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't buy luxury items. You may be tempted to order that new Turkish rug for the soon-to-be-yours living room, but it's advisable to avoid making large purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your lender may send up red flags if you buy your appliances on your credit cards during your loan process. Using cash to buy expensive items can even create a problem: most lenders take into consideration your available cash when approving your loan.

Don't get a new job. Consistency in your career history is a good thing to lending institutions. Getting a new job may not affect your ability to qualify for a loan - particularly if you are improving your salary. But for some, getting a new job during the mortgage loan application process could bring concern and stymie your application.

Don't move money around or switch banks. As your lender reviews your mortgage application, you will probably be instructed to produce bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid finances. To detect potential fraud, most lending institutions need detailed paperwork to verify the source of all cash. Even for innocent purposes, moving around funds or switching banks may make it difficult for the lending institution to document your account history.

Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. Until closing, any good faith deposit actually belongs to you. Although your seller might not understand this, any good faith funds should be applied to your closing expenses. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until closing. The final disposition of earnest funds, if your sale fails, should be written in the contract with your seller.

At New Millennium Mortgage Co. NMLS: 331173, we answer questions about this process every day. Give us a call: (941) 366-5800.

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