Don't Trip Yourself up While Buying a New Home

What's better than getting a bunch of new furnishings to go in your future home? Nothing. But making large purchases 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. Here are some actions to stay clear of before closing to assure the transaction goes well.

Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy new living room furniture could compromise your loan process by distorting your numbers. It's even a red flag to make those big purchases using cash. Lenders are examining your cash on hand when considering your loan.

Don't get a new career. Your recent job history should show consistency. Getting a new career before you apply for a loan may not get in the way of your approval at all. But in some cases, switching jobs during the loan application process could raise concern and hinder your application.

Don't switch your accounts to a new bank or move around your cash. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other accounts) will be studied as the lender makes decisions regarding your mortgage application. To detect potential fraud, most lenders need thorough paperwork to determine the source of all incoming funds. No matter the reason, changing banks or transferring money may raise a red flag with the lender and impede your loan process.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it is actually yours until the sale closes. The good faith money is to be applied to your expenses closing; some sellers might not understand this. A neutral party, like an attorney can hold your earnest funds, or you may place them temporarily into a trust account until you close. The final disposition of earnest money, if your sale fails, should be documented in the purchase agreement with the seller.

Brimor National Mortgage can answer questions about these "Don'ts" and many others. Call us: 949-544-4908.

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