Don't Trip Yourself up While Buying a Home

What's better than getting a bunch of new stuff to adorn your future home? Nothing. But making big ticket purchases before closing can be a mistake. There are still a few major hurdles to jump before your loan closes. Here are some actions to avoid before closing to assure the transaction goes well.

Don't empty your wallet on big-ticket items It may be tempting to buy that new sofa for the soon-to-be-yours den, but it's best to stay away from making large purchases 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 appliances on your credit cards during your loan process. Because lenders are reviewing your financial accounts, a large cash purchase is also not advised.

Don't get a new job. Your recent career history should show consistency. Finding a new job (particularly one with a better paycheck) may not hinder your ability to qualify for a mortgage. But for some people, changing careers during the mortgage loan approval process could bring concern and hinder your application.

Don't move money around or change banks. As your lender reviews your loan application, you will likely be required to submit bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid assets. The lender is looking for a steady rise and fall of your funds over the month, in order to rule out fraud. No matter the reason, switching banks or moving money from one account to another could raise a red flag with your lender and slow down your approval process.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's until closing. Although your FSBO seller may not know this, any good faith money must be applied to your closing expenses. Find an attorney or other neutral party who is able to hang on to the funds or place them in a trust account until closing. Your purchase contract should specify where the deposit goes if the transaction fails.

At VSI Home Lending, we answer questions about this process every day. Call us: 2603382561.