Don't Trip Yourself up While Buying your New Home

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What's more fun than buying a bunch of new stuff to go in your future home? Not much. But buying big ticket items before closing could be trouble. Until the house is really yours, there are still some hoops to jump through. Here are some actions to avoid before closing to be sure the transaction goes smoothly.

Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's even a bad idea to make those large purchases using cash. Lending Institutions are looking at your available cash when considering your loan.

Don't go on a career search. Your recent job history should show stability. Finding a new job (particularly one with a bump in salary) may not hinder your ability to qualify for a loan. But for some people, switching jobs during the loan approval process might bring concern and affect your application.

Don't take your accounts to a new bank or move around your finances. Most lenders will ask for recent bank statements on your accounts: savings, checking, money market, and other assets. In order to eliminate fraud, lenders will need a clear and consistent picture of how you earn your living and where any additional wealth comes from. Even for practical purposes, transferring funds or switching banks may make it harder for the lending institution to verify your bank history.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not to the seller until the deal closes. The good faith money is to go toward your expenses upon closing; the individual seller might not know this. You'll want to put the funds into a trust account, or get an attorney to hold them until the deal closes. The final disposition of good faith funds, in the case of a failed transaction, should be written in the purchase agreement with the seller.

At VITEK MORTGAGE GROUP, we answer questions about this process every day. Call us: 800-530-9421.