Don't Trip Yourself up While Buying your New Home

What's better than buying a bunch of new furnishings to go in your future home? Not much. But making large purchases before closing can be harmful. It's best to remember that until closing, your lender is watching your accounts very closely. Here are some things to avoid before closing to assure the transaction goes well.

Don't buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to buy expensive items can even be an issue: most banks take into consideration your cash reserve when approving your application.

Don't go on a job search. Your recent work history should show stability. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, switching jobs during your approval process may influence your approval.

Don't change banks or move money around in your bank accounts. While the lender considers your loan application, you will probably be asked to submit bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid finances. In order to detect fraud, lenders need a consistent portrayal of how you earn your living and where additional wealth comes from. No matter the purpose, moving banks or transferring money might raise a red flag with your lender and slow down your qualification process.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although some individual sellers might not know this, the good faith money should go toward the buyer's closing expenses. Find an attorney or other neutral person who will hold the deposit or place it in a trust account until closing. The contract should indicate to whom the funds go if the transaction falls through.

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