Things to Avoid While Buying a New Home

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What's better than buying a bunch of new stuff to adorn your future home? Nothing. But making big ticket purchases before your loan closes can be a misstep. Until the house is really yours, there still remain some hoops to jump through. Below you'll find a list of things to stay away from during this critical time of your home purchase.

Don't throw your money around. It may be tempting to order that new sofa for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Using plastic to buy new living room furniture could jeopardize your loan process by distorting your numbers. Using cash to buy big-ticket items can also create a bad idea: many lenders take into consideration your available cash when approving your mortgage.

Don't get a new career. Lenders look for a consistent job history on your application. Getting a new career before you start the application process for a loan may not affect your approval at all. But in some cases, changing careers during the mortgage loan application process could raise concern and stymie your application.

Don't switch banks or move cash around in your bank accounts. Most lenders will require you to provide recent bank statements on all of your accounts: savings, checking, money market, and other liquid assets. The lender is looking for a steady flow of your money over the month, in the interest of avoiding fraud. Even for practical purposes, transferring money or changing banks could make it more difficult for the lending institution to document your account history.

Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until the transaction is final. Your good faith funds are to be applied to your expenses upon closing; a individual seller might not understand this. It's wise to put the money into a trust account, or get an attorney to hold it until closing. Your contract should document to whom the deposit goes if the home purchase fails.

Graystone Mortgage can answer questions about these "Don'ts" and many others. Give us a call at (801) 983-8201.