Don't Trip Yourself up While Buying a Home

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. Until the house is really yours, there are still some hoops to jump through. Below you'll find a list of things to stay away from during this crucial time of your home purchase.

Don't buy luxury items. Although you will be planning ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's even a mistake to make those large purchases with cash. Lending Institutions are looking at your cash reserve when considering your loan.

Don't look for a new career. Stability in your work history is a positive thing to lenders. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are improving your salary. However, if you switch careers before approval, your process could fail or be bogged down.

Don't switch banks or move money around in your bank accounts. Your lending institution will require you to provide recent bank statements for accounts in your name: checking, savings, money market, and other liquid assets. The lender wants to see a steady flow of your money over the pay period, in the interest of avoiding fraud. Even for practical reasons, transferring cash or switching banks may make it more difficult for your lender to verify your bank history.

Don't give cash directly to your seller (generally in the case of of "for sale by owner") for earnest money. As a rule, your earnest money belongs to you, not to the seller up until the sale is final. Although some FSBO sellers may not realize this, your earnest money should go toward your closing expenses. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until closing. If your transaction fails, the purchase contract should indicate to whom this good faith funds should go.

Foxfield Financial can walk you through the pitfalls of getting a mortgage. Call us at 7205988300.