Don't Trip Yourself up While Buying a New Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. It's best to remember that until you get the keys, your lender is watching you very closely. We have listed some things below you will want to avoid when waiting for your loan to close.

Don't overspend on big-ticket items You may be itching to order that new Turkish rug for the soon-to-be-yours living room, but it's advisable to avoid making big ticket buys like furniture, appliances, jewelry, or vacations until closing. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy big-ticket items can also create a mistake: most lending institutions look at your available cash when approving your loan.

Don't go on a job search. Your recent job history should show stability. Getting a new job before you apply for a mortgage loan may not jeopardize your approval at all. But for some, changing jobs during the mortgage loan approval process could raise concern and affect your approval.

Don't move cash around or switch banks. While your lender reviews your mortgage loan package, you will likely be required to submit bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. Your lending institution wants to see a consistent rise and fall of your money each pay period, in order to avoid fraud. No matter the purpose, moving banks or moving money from one account to another can raise a red flag with the lender and slow your approval process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until closing. Your good faith funds are to be applied to your expenses upon closing; some FSBO sellers may not understand this. You'll need to put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the deal closes. The contract should specify to whom the funds go if the transaction does not go through.

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

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