What should you avoid when buying a home?

Congrats!  You have decided to buy a house!  Home Buyer's are very excited about the new upcoming purchase, and rightfully so.  However, don't go out and buy roomfuls of furniture just yet.  Make sure you review this page first to help avoid MAJOR mistakes that can make closing your mortgage a lot more difficult.

• Don't make an expensive purchase. Your first thought may be to go out and start decorating your new home.  Making a trip to the home improvement store, the furniture store, buy a new big screen TV, and book "that final vacation".  However, doing these by either applying for a new store credit card or using one of your current cards can greatly impact your current credit standing.  At certain times, the lender on your mortgage might have to re-pull your credit report, and changing your credit profile can have a HUGE adverse impact on your loan. Don't spend all the cash in your bank accounts, either!  Many loan programs look at the account balances you have as part of your risk profile, and reducing these accounts can also hurt you.
• Don't change your employment (without talking to your mortgage professional first). Even if you will be taking a job for a higher salary, there are important things to consider when doing this.  Let your mortgage professional help to ensure the switch is done in a timely manner thsat will not affect your loan closing.
• Don't switch banks or move money around. AOne of the most complicated parts of the mortgage approval process is often tracing the "money trail" in a transaction.  For most standard loan programs, your mortgage professional has to "source and season" your assets for the last 60 days.  As you move money around in accounts, the average balances change on these accounts and can hurt your loan process.  Leave the money where it is until you discuss your needs with your mortgage professional, who can give you guidance on when everything is set with proving the assets and let you know the best way to access the money.  Do not make any "undocumented large deposits" which is a deposit of cash you cannot prove came from a source that was previously verified as yours. Changing banks or transferring money to another account, even if its just to consolidate funds could make it difficult for the lender to document your funds.
• Don't give a good faith deposit directly to the seller in a FSBO purchase. As a rule, your good faith deposit belongs to you, not to the seller, until the deal closes. Your FSBO seller may not know that your good faith funds should be applied to your expenses at closing. Get an attorney or other neutral party who can hold the deposit or put it in a trust account until you close on the home. Your purchase contract should dictate to whom the funds go should the transaction fall through.

Please contact us to go over these and other pitfalls that can easily be avoided.