Don't Trip Yourself up While Buying a New Home

What's more fun than buying a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes can be an error. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't buy big-ticket items. Although you may be listing ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and vehicle purchases until the closing of your loan. You may send up red flags with your lender if you buy new furniture on your credit cards in the middle of your loan process. It's also a red flag to make those huge purchases with cash. Lenders are looking at your cash reserve when considering your loan.

Don't look for a new job. Consistency in your job history is a good thing to banks and other lenders. Finding a new career (particularly one with a bigger paycheck) may not hinder your ability to qualify for a loan. However, finding a new job in the middle of your approval process may influence your approval.

Don't change banks or move finances around in your bank accounts. Most lenders will ask for recent bank statements of all of your accounts: savings, checking, money market, and other assets. Your lending institution is looking for a consistent flow of your money each pay period, in the interest of avoiding fraud. Even for innocent reasons, moving around cash or switching banks could make it difficult for your lender to confirm your account history.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit remains yours. Although some individual sellers might not realize this, any earnest money should be applied to your closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until closing. The final disposition of earnest funds, in the case of a failed transaction, should be included 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. Give us a call at (808) 935-0678.