Don't Trip Yourself up While Buying your New Home

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What's more fun than buying a bunch of new furnishings to go in your future home? Nothing. But making big purchases before closing can be a mistake. There still remain a few major hurdles to jump before closing. Here are some things to avoid during the home buying process to be sure the transaction goes smoothly.

Don't throw your money around. You may be itching to buy that new sofa for the soon-to-be-yours parlor, but it's best to avoid making large purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Since lending institutions are examining your financial accounts, a large cash purchase is also a mistake.

Don't get a new career. Your recent job history should show stability. Changing jobs may not affect your ability to qualify for a loan - particularly if you are going to be making more money. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.

Don't take your accounts to a new bank or move around your cash. Your lender will instruct the submission of recent bank statements on accounts in your name: checking, savings, money market, and other liquid assets. To avoid potential fraud, most lending institutions want a thorough paper trail to verify the source of all incoming funds. Changing banks or transferring money elsewhere - no matter the purpose - may make it harder for your lender to verify your funds.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. Although some individual sellers may not understand this, any good faith money should be used for the buyer's closing expenses. You'll need to put the money into a trust account, or get an attorney to hold it until closing. The contract should indicate to whom the funds go if the home purchase fails.

At Manhattan Lending, LLC, we answer questions about this process every day. Give us a call at 512.257.3749.