What to Avoid During a Home Purchase

Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Until closing, there are still some hoops to jump through. Here are some actions to refrain from before closing to assure your transaction goes smoothly.

Don't throw your money around. Although you will be dreaming of ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and vehicle purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. Using cash to purchase expensive items can also create an issue: most lenders look at your cash on hand when approving your application.

Don't get a new career. Stability 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 jeopardize your ability to qualify for a loan. However, if you switch careers before your loan is approved, your loan process could fail or be bogged down.

Don't switch banks or move money around in your bank accounts. Bank statements from the last two or three months for your accounts (savings, checking, money market, and others) will probably be reviewed as the lending institution makes decisions regarding your loan application. To detect fraud, lenders will need clear documentation of how you earn your living and where additional money comes from. No matter the reason, moving banks or transferring money could raise a red flag with your lender and impede your loan process.

Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith money does not belong to the seller: it remains yours until the transaction is final. The earnest money is to be applied to your expenses upon closing; the FSBO seller may not realize this. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The contract should dictate who gets the deposit if the home purchase 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.