Don't Trip Yourself up While Buying a Home

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What's more fun than buying a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before closing can be a misstep. It's wise to remember that until closing, your lender is watching your finances very closely. We have listed some things below you will want to stay away from when waiting for closing.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's also a red flag to make those huge purchases with cash. Lenders are examining your cash reserve when considering your loan.

Don't get a new career. Your recent work history should show consistency. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are getting a bigger paycheck. But in some cases, changing careers during the mortgage application process might bring concern and stymie your application.

Don't change banks or move money around in your bank accounts. Bank statements from the last few months for accounts in your name (savings, checking, money market, and others) will likely be reviewed as the lending institution makes decisions regarding your loan application. To detect potential fraud, most lenders need detailed paperwork to document the source of all incoming funds. Changing banks or transferring finances elsewhere - for whatever reason - may hinder the review of your accounts.

Don't give funds directly to your seller (commonly in the case of of "for sale by owner") to be considered a "good faith" deposit. Until the sale is complete, any earnest money remains yours. Your good faith money is to be used for your expenses closing; some FSBO sellers may not understand this. It's wise to put the deposit into a trust account, or get an attorney to hold it until closing. The disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with the seller.

NorthStar Mortgage Corp can answer questions about these "Don'ts" and many others. Call us: (781) 326-6363.