Don't Trip Yourself up While Buying your New Home

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What's better than buying a bunch of new furnishings to go in your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until closing, there still remain some hoops to jump through. Here are some things to stay clear of before closing to be sure your transaction goes well.

Don't buy big-ticket items. It may be tempting to order that new sofa for the soon-to-be-yours living room, but it's advisable to stay away from making big ticket purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase expensive items can even be an issue: most lending institutions take into consideration your cash on hand when approving your application.

Don't go on a career search. Your recent work history should show consistency. Getting a new career before you apply for a mortgage may not affect your approval at all. However, if you switch careers before your loan is approved, your process could fail or be stalled.

Don't move money around or change banks. Most lenders will ask for recent bank statements on accounts in your name: savings, checking, money market, and other assets. In order to detect fraud, lenders require a clear and consistent picture of how you earn your living and where additional money comes from. Even for innocent purposes, moving around funds or changing banks might make it harder for the lender to document your account history.

Don't give funds directly to your seller (usually in cases of "for sale by owner") to be used as a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until closing. A FSBO seller may not realize that any earnest money must go toward your expenses upon closing. It's advisable to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. Your contract should document who gets the earnest funds if the transaction falls through.

MHQ Financial Services can answer questions about these "Don'ts" and many others. Call us at 573-302-9990.