Don't Trip Yourself up While Buying your Home

Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves their loan. Until your loan closes, there still remain some hoops to jump through. Here are some actions to refrain from during the home buying process to be sure your transaction goes smoothly.

Don't overspend on big-ticket items Although you may be planning ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and vehicle purchases until your loan closes. Using credit cards to buy furniture could jeopardize your lending process by altering your numbers dramatically. It's also a bad idea to make those big-ticket purchases using cash. Lenders are looking at your cash reserve when considering your loan.

Don't look for a new career. Lending Institutions feel comfortable seeing a consistent job history on your application forms. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.

Don't take your accounts to a new bank or move around your cash. As the lending institution considers your loan application, you will likely be asked to provide bank statements for recent months for your saving and checking accounts, money market funds and other liquid finances. The lending institution looks for a consistent flow of your money each pay period, in the interest of avoiding fraud. No matter the reason, switching banks or transferring money can raise a red flag with the lender and slow down your application process.

Don't give cash directly to your seller (usually in the case of of "for sale by owner") to be considered a "good faith" deposit. Your good faith money does not belong to the seller: it remains yours until the sale closes. The earnest funds are to go toward your expenses closing; some FSBO sellers might not realize this. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the deal closes. The final disposition of earnest funds, if your transaction fails, should be documented in the contract with your seller.

At VSI Home Lending, we answer questions about this process every day. Call us: (260) 338-2561.

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