Don't Trip Yourself up While Buying a Home

What's better than buying a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before closing could be trouble. Keep in mind that until closing, your lender is watching your accounts very closely. We have given you a list of things below we suggest you stay away from when waiting for closing.

Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until your loan closes. Using plastic to buy furniture could compromise your loan process by distorting your numbers. Using cash to buy big-ticket items can also be an issue: many banks consider your available cash when approving your loan.

Don't go on a job search. Lending Institutions feel comfortable seeing a consistent career history on your application. Getting a new job before you apply for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before approval, your mortgage process could fail or be stalled.

Don't move cash around or switch banks. As your lender reviews your mortgage loan application, you will likely be instructed to provide bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid wealth. The lending institution will need to see a consistent flow of your funds over the month, in order to rule out fraud. Changing banks or moving money to another account - for whatever purpose - may make it harder for your lender to verify your funds.

Don't give cash directly to your seller (usually 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. Some FSBO sellers may not realize that any good faith funds must be used for your expenses at closing. Find a lawyer or other neutral party who is able to hold the deposit or put it in a trust account until you close. The disposition of earnest funds, if your sale falls through, should be indicated in the contract with the seller.

At Tier One Mortgage, LLC, we answer questions about this process every day. Call us: (585) 282-0960.