Things to Avoid While Purchasing a New Home

Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves the loan. There are still a few major hurdles to jump before your loan closes. Here are some things to avoid before closing to assure the transaction goes well.

Don't overspend on big-ticket items It may be tempting to order that new sofa for the soon-to-be-yours parlor, but it's best to stay away from making big ticket buys like furniture, appliances, jewelry, or vacations until your home loan closes. You may send up red flags with your lender if you buy your appliances on your credit cards in the middle of your loan process. Using cash to buy big-ticket items can even create an issue: most banks look at your cash on hand when approving your loan.

Don't get a new career. Consistency in your work history is a positive thing to lenders. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, getting a new career in the middle of the loan process could influence whether or not you are approved.

Don't move cash around or switch banks. As the lending institution reviews your mortgage loan application, you will likely be instructed to provide bank statements for recent months on your checking accounts, savings accounts, money market funds and other liquid finances. Your lending institution looks for a steady rise and fall of your money each month, in the interest of avoiding fraud. Changing banks or moving money to another account - no matter the reason - might make it difficult for your lender to review your funds.

Don't give funds directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. As a rule, your good faith money is yours, not the seller's until the deal closes. Although your seller might not realize this, any good faith funds must be used for the buyer's closing expenses. 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. If your sale falls through, the contract with the seller should document to whom the earnest money should go.

Family Mortgage Company of Hawaii, Inc. NMLS #244497 can answer questions about these "Don'ts" and many others. Call us: (808) 935-0678.

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