Things to Avoid While Buying a New Home

What's better than getting a bunch of new furniture to adorn your future home? Nothing. But buying big ticket items before your loan closes can be a misstep. Until your loan closes, there are still some hoops to jump through. Below you'll find a list of actions to avoid during this critical time of your home purchase.

Don't buy luxury items. It may be tempting to order that new couch for the soon-to-be-yours living room, but it's advisable to avoid making big ticket buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. You may send up red flags with your lender if you purchase new electronics 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 looking at your cash reserve when considering your loan.

Don't look for a new career. Consistency in your job history is a positive thing to lenders. Finding a new career (especially one with a better paycheck) may not affect your ability to qualify for a loan. However, finding a new job during the application process may affect your approval.

Don't move cash around or switch banks. Bank statements from recent months for your accounts (checking, savings, money market, and other assets) will probably be analyzed as the lending institution makes decisions regarding your approval. In order to detect fraud, lenders require clear documentation of how you earn your money and where additional funds come from. No matter the purpose, switching banks or moving money from one account to another could raise a red flag with the lender and slow down your loan process.

Don't give money directly to your seller (generally in the case of of "for sale by owner") for earnest money. Until the completion of the deal, any good faith deposit remains yours. The earnest money is to go toward your expenses closing; the individual seller may not realize this. You'll want to put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. Your contract should dictate who keeps the earnest funds 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.