What to Avoid During a Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Until your loan closes, there are still some hoops to jump through. Here are some things to avoid before closing to assure your transaction goes well.

Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. 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. It's also a red flag to make those large purchases with cash. Lenders are looking at your cash on hand when considering your loan.

Don't get a new job. Consistency in your work history is a good thing to banks and other lenders. Getting a new career before you start the application process for a mortgage loan may not compromise your approval at all. However, finding a new career during your approval process may affect whether or not you are approved.

Don't move finances around or switch banks. Bank statements from recent months for your accounts (checking, savings, money market, and other assets) will likely be analyzed as the lender considers your approval. To avoid potential fraud, most loans require a thorough paper trail to verify the source of all incoming funds. No matter the purpose, moving banks or moving money from one account to another might raise a red flag with the lender and slow your application process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your good faith deposit belongs to you, not to the seller up until the deal closes. Some sellers might not know that any earnest money must go toward your expenses at closing. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until closing. If your transaction fails, your contract with the seller should dictate where the good faith funds should go.

At Family Mortgage Company of Hawaii, Inc. NMLS #244497, we answer questions about this process every day. Call us at (808) 935-0678.

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