Don't Trip Yourself up While Buying a Home

In the rush of excitement 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 your keys are in hand, your lender is watching you very closely. Here are some things to stay clear of during the home buying process to be sure the transaction goes smoothly.

Don't buy luxury items. Although you will be dreaming of ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and car purchases until the closing of your loan. Your lender may send up red flags if you finance new electronics on your credit cards during your loan process. It's also a bad idea to make those huge purchases using cash. Lenders are examining your cash on hand when considering your loan.

Don't look for a new career. Stability in your work history is a positive thing to lenders. Finding a new career (especially one with a better salary) may not jeopardize your ability to qualify for your mortgage loan. But for some, changing jobs during the mortgage loan application process may raise concern and hinder your application.

Don't move cash around or switch banks. Bank statements from the last few months for your accounts (savings, checking, money market, and other accounts) will likely be studied as the lender considers your loan application. The lending institution is looking for a consistent flow of your money over the pay period, in order to avoid fraud. Switching banks or moving finances to another account - no matter the purpose - might make it harder for your lender to review your funds.

Don't give cash directly to your seller (commonly in the case of of "for sale by owner") to be used as earnest money. As a rule, your good faith deposit belongs to you, not the seller until the deal closes. The good faith funds are to go toward your expenses closing; the individual seller may not realize this. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until you close. The disposition of good faith money, in the case of a failed transaction, should be specified in the contract with your seller.

RPM Mortgage - Paul Schectman Senior Mortgage Advisor can answer questions about these "Don'ts" and many others. Give us a call at 415-381-7006.