Things to Avoid While Buying a Home

What's better than getting a bunch of new stuff to adorn your future home? Not much. But making big purchases before closing could be trouble. Keep in mind that until your keys are in hand, your lender is watching you very closely. We have listed some actions below we suggest you stay away from when waiting for closing.

Don't empty your wallet on big-ticket items You may be itching to buy that new Turkish rug for the soon-to-be-yours parlor, but it's best to stay away from making large purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing new furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to purchase big items can also be a problem: many banks look at your available cash when approving your mortgage loan.

Don't go on a job search. Consistency in your career history is a positive thing to lenders. Getting a new job before you start the application process for a loan may not get in the way of your approval at all. But for some people, switching jobs during the loan application process might raise concern and affect your application.

Don't move money around or switch banks. Bank statements from the last few months for your accounts (checking, savings, money market, and others) will probably be studied as the lending institution makes decisions regarding your mortgage application. The lender looks for a steady flow of your funds each month, in the interest of avoiding fraud. No matter the reason, changing banks or moving funds from one account to another could raise a red flag with your lender and slow down your qualification process.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller up until the deal closes. Your seller might not know that any good faith money is to go toward your expenses at closing. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until closing. If your home purchase fails, the purchase contract should dictate where the earnest money should go.

Boardwalk Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 1-800-606-2794.