Don't Trip Yourself up While Buying your Home

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What's more fun than getting a bunch of new stuff to adorn your future home? Nothing. But buying big ticket items before your loan closes can be a mistake. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. We have given you a list of actions below we suggest you avoid when waiting for closing.

Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy furniture could compromise your loan process by distorting your numbers. It's also a bad idea to make those big purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.

Don't get a new career. Lenders look for a consistent job history on your paperwork. Getting a new job before you apply for a loan may not get in the way of your approval at all. But for some people, switching jobs during the mortgage loan approval process could raise concern and affect your application.

Don't take your accounts to a new bank or move around your money. Your lending institution will ask for recent bank statements on your accounts: savings, checking, money market, and other assets. In order to eliminate fraud, lenders need clear documentation of how you earn your living and where any additional money comes from. No matter the purpose, moving banks or moving money from one account to another could raise a red flag with the lender and slow your application process.

Don't give 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 the sale is final. Although your FSBO seller may not realize this, the earnest money must be used for your closing expenses. Find an attorney or other neutral person who will hold the funds or put them in a trust account until closing. If your sale falls through, the contract with the seller should indicate to whom this earnest money should go.

At Mann Mortgage, we answer questions about this process every day. Give us a call at (808) 264-3715.

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