What to Avoid During your Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves their loan. Until closing, there are still some hurdles to jump. We have listed some things below we suggest you avoid when waiting for your loan to close.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Your lender may send up red flags if you purchase new furniture on your credit cards in the middle of your loan process. It's even a red flag to make those huge purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.

Don't get a new career. Consistency in your career history is a positive thing to lending institutions. Getting a new career before you apply for a mortgage may not compromise your approval at all. However, if you switch careers before approval, your mortgage process could fail or be stalled.

Don't change banks or move cash around in your accounts. Your lender will ask for recent bank statements for accounts in your name: checking, savings, money market, and other assets. In order to avoid fraud, lenders want to see a clear and consistent picture of how you earn your money and where additional funds come from. Even for practical reasons, transferring money or switching banks could make it difficult for the lending institution to document your bank history.

Don't give money directly to your seller (usually in the case of of "for sale by owner") to be considered a "good faith" deposit. Until closing, the good faith money remains yours. Your good faith money is to be used for your expenses closing; a individual seller might not understand this. Get an attorney or other neutral party who can hang on to the deposit or put it in a trust account until you close. The final disposition of earnest money, in the case of a failed transaction, should be indicated in the purchase agreement with your seller.

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