Don't Trip Yourself up While Buying your Home

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With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until closing, your lender is watching your accounts very closely. Here are some actions to refrain from during the home buying process to assure your transaction goes smoothly.

Don't make expensive purchases. Although you may be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using plastic to buy new living room furniture could jeopardize your lending process by changing your numbers dramatically. Because lending institutions are looking closely at your financial accounts, a large cash purchase is also not advised.

Don't look for a new job. Lending Institutions like to see a consistent job history on your application forms. Finding a new career (particularly one with a bigger salary) may not jeopardize your ability to qualify for a loan. However, if you switch careers before you qualify, your mortgage process could fail or be bogged down.

Don't switch banks or move finances around in your bank accounts. As the lender considers your mortgage loan application, you will probably be instructed to submit bank statements for the last few months on your checking accounts, savings accounts, money market accounts and other liquid finances. To eliminate potential fraud, most lending institutions want detailed paperwork to verify the source of all funds. No matter the purpose, switching banks or transferring money can raise a red flag with the lender and impede your approval process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until closing, any good faith money remains yours. Some FSBO sellers may not realize that this earnest money should go toward your expenses at closing. We recommend that you put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. Should your home purchase fail, the purchase contract should dictate to whom this good faith deposit should go.

Creative Financial can answer questions about these "Don'ts" and many others. Call us: (808) 891-9292.
ven if its just to consolidate funds - could make it difficult for the lender to document your funds.
  • Don't give a good faith deposit directly to the seller in a FSBO purchase. As a rule, your good faith deposit belongs to you, not to the seller, until the deal closes. Your FSBO seller may not know that your good faith funds should be applied to your expenses at closing. Get an attorney or other neutral party who can hold the deposit or put it in a trust account until you close on the home. Your purchase contract should dictate to whom the funds go should the transaction fall through.
  • Don't disregard your lenders requirements. You may have been pre-approved for the loan but your work with the lender is far from over. In order to process your loan, you need to meet certain requirements. Your lender will need copies of your bank statements, W2s and other paperwork. It is up to you to get it to him or her as soon as possible. Failure to submit certain qualifying documents could cause you to lose your loan and the financing you need to buy your home.
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