Don't Trip Yourself up While Buying your New Home

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Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the lender approves the loan. Until closing, there are still some hoops to jump through. We have listed some actions below we suggest you stay away from when waiting for closing.

Don't buy luxury items. It may be tempting to buy that new easy-chair for the soon-to-be-yours den, but it's best to avoid making major purchases like furniture, appliances, jewelry, or cars until closing. You may send up red flags with your lender if you purchase your furniture on your credit cards in the middle of your loan process. Since lenders are examining your financial accounts, a large cash purchase is also a mistake.

Don't look for a new job. Lenders look for a consistent work history on your paperwork. Getting a new job may not compromise your ability to qualify for a mortgage loan - especially if you are going to be making more money. However, if you switch careers before you qualify, your process could fail or be bogged down.

Don't switch banks or move cash around in your accounts. While the lender considers your mortgage application, you will probably be required to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid wealth. To avoid potential fraud, most lending institutions require detailed paperwork to verify the source of all cash. Changing banks or moving finances to another account - no matter the purpose - might hinder the review of your funds.

Don't give money directly to your seller (generally in the case of of "for sale by owner") for earnest money. Until the completion of the deal, the good faith money remains yours. The earnest money is to go toward your expenses upon closing; some FSBO sellers may not know this. It's wise to put the money into a trust account, or get a neutral party, like an attorney, to hold it until the deal closes. Your purchase contract should dictate who keeps the money if the home purchase falls through.

At Paragon Mortgage Services, Inc., we answer questions about this process every day. Give us a call at 303.727.2466.