Don't Trip Yourself up While Buying a New Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves the loan. Until your keys are in hand, there still remain some hoops to jump through. Below you'll find a list of things to stay away from during this crucial time of your home purchase.

Don't make expensive purchases. Although you may be planning ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until your loan closes. Your lender may send up red flags if you buy your appliances on your credit cards in the middle of your loan process. Using cash to buy expensive items can also be a bad idea: many lending institutions look at your cash on hand when approving your mortgage loan.

Don't go on a job search. Your recent work history should show consistency. Getting a new career before you start the application process for a mortgage loan may not get in the way of your approval at all. But in some cases, getting a new career during the mortgage application process may raise concern and stymie your approval.

Don't switch banks or move money around in your accounts. As your lending institution reviews your mortgage package, you will probably be instructed to provide bank statements for the last few months for your saving and checking accounts, money market funds and other liquid finances. To detect fraud, lenders want to see a clear and consistent picture of how you earn your living and where additional funds come from. Even for practical reasons, transferring finances or changing banks could make it harder for your lending institution to confirm your account history.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith money remains yours. The good faith funds are to go toward your expenses upon closing; your individual seller might not realize this. You'll want to put the money into a trust account, or get an attorney to hold it until the closing of the sale. The disposition of good faith money, if your sale falls through, should be documented in the purchase agreement with the seller.

American Commerce Mortgage can answer questions about these "Don'ts" and many others. Give us a call at 714-970-9700.

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