Things to Avoid While Buying a New Home

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Keep in mind that until you get the keys, your lender is watching your finances very closely. Here are some things to refrain from before closing to assure your transaction goes well.

Don't empty your wallet on big-ticket items It may be tempting to order that new Turkish rug for the soon-to-be-yours den, but it's best to avoid making major purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a mistake to make those large purchases with cash. Lending Institutions are looking at your cash reserve when considering your loan.

Don't get a new job. Stability in your work history is a good thing to lending institutions. Getting a new job before you start the application process for a loan may not affect your approval at all. But for some people, changing jobs during the mortgage approval process might bring concern and affect your application.

Don't move cash around or switch banks. Most lenders will require you to provide recent bank statements on your accounts: savings, checking, money market, and other liquid assets. In order to detect fraud, lenders want to see a clear and consistent picture of how you earn your living and where any additional wealth comes from. Switching banks or moving funds to another account - for whatever reason - might hinder the review of your accounts.

Don't give cash directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Some sellers may not know that the good faith funds must be used for your expenses upon closing. We recommend that you put the funds into a trust account, or get a neutral person, like a lawyer to hold them until the deal closes. Should your home purchase fail, your contract with the seller should dictate where your earnest money should go.

Family Mortgage Company of Hawaii, Inc. NMLS #244497 can walk you through the pitfalls of getting a mortgage. Give us a call: (808) 935-0678.

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