Things to Avoid While Buying a New Home

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Some 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. There are still a few major hurdles to jump before the house is really yours. Here are some actions to avoid before closing to assure your transaction goes smoothly.

Don't make expensive purchases. It may be tempting to order that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to avoid making large purchases like furniture, appliances, jewelry, or vacations until closing. You may send up red flags with your lender if you buy new appliances 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 reserve when considering your loan.

Don't get a new career. Lending Institutions like to see a consistent job history on your application forms. Finding a new job (especially one with a bump in salary) may not change your ability to qualify for a mortgage. But in some cases, getting a new job during the mortgage loan application process might raise concern and stymie your application.

Don't change banks or move cash around in your bank accounts. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will be analyzed as the lender makes decisions regarding your approval. To detect potential fraud, most lending institutions require detailed paperwork to determine the source of all incoming funds. No matter the reason, switching banks or moving money from one account to another may raise a red flag with your lender and slow your loan process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until the completion of the deal, the good faith deposit actually belongs to you. Although your FSBO seller may not know this, your earnest money should go toward the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the deal closes. The final disposition of earnest funds, if your home purchase falls through, should be documented in the contract with the seller.

Fairfax Mortgage Investments can walk you through the pitfalls of getting a mortgage. Give us a call: 703-385-6122 #236.