What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. It's wise to remember that until your keys are in hand, your lender is watching your finances very closely. Here are some things to refrain from during the home buying process to assure the transaction goes smoothly.

Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Using cash to buy big items can also create an issue: many banks look at your cash on hand when approving your application.

Don't go on a job search. Your recent career history should show stability. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, switching jobs during the loan process could influence whether or not you are approved.

Don't switch your accounts to a new bank or move around your money. Your lender will instruct the submission of recent bank statements on accounts in your name: savings, checking, money market, and other assets. The lender hopes to see a steady rise and fall of your funds over the pay period, in order to rule out fraud. No matter the reason, switching banks or transferring money can raise a red flag with your lender and slow down your loan process.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until closing, any good faith deposit remains yours. Your good faith money is to go toward your expenses closing; some individual sellers might not understand this. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until closing. The disposition of earnest funds, in the case of a failed transaction, should be specified in the purchase agreement with the seller.

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

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