Don't Trip Yourself up While Buying your Home

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before your loan closes. Here are some things to refrain from before closing to assure your transaction goes smoothly.

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 dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lenders are looking closely at your bank accounts, a large cash purchase is also not advised.

Don't go on a career search. Your recent job history should show consistency. Finding a new job (particularly one with a bump in salary) may not jeopardize your ability to qualify for your mortgage loan. But for some people, changing jobs during the loan approval process might bring concern and affect your application.

Don't take your accounts to a new bank or move around your finances. Your lender will require you to produce recent bank statements of your accounts: checking, savings, money market, and other assets. The lending institution hopes to see a steady rise and fall of your money each pay period, in the interest of ruling out fraud. Even for innocent purposes, transferring funds or changing banks may make it difficult for the lender to document your bank history.

Don't give money directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. Until the completion of the deal, the good faith deposit actually belongs to you. Any good faith money is to go toward your expenses upon closing; some sellers might not know this. An attorney or other type of neutral party can hang onto your funds, or you may place them temporarily into a trust account until closing. The purchase contract should document to whom the money goes if the transaction fails.

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