What to Avoid During your Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Keep in mind that until you get the keys, your lender is watching your finances very closely. Here are some actions to stay clear of during the home buying process to assure your transaction goes well.

Don't make expensive purchases. Although you may be listing ways to turn your new home into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and car purchases until your loan closes. Your lender may send up red flags if you finance your furniture on your credit cards during your loan process. It's also a bad idea to make those big purchases using cash. Lenders are looking at your cash reserve when considering your loan.

Don't go on a job search. Your recent work history should show consistency. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are going to be making more money. But in some cases, getting a new career during the mortgage approval process could raise concern and affect your approval.

Don't move cash around or switch banks. Your lender will require you to submit recent bank statements on accounts in your name: savings, checking, money market, and other assets. The lender looks for a steady flow of your money over the month, in the interest of avoiding fraud. Even for innocent purposes, transferring finances or changing banks might make it harder for the lender to verify your bank history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith deposit is yours, not the seller's until the sale is final. Although your seller may not realize this, the good faith funds must go toward the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. The purchase contract should indicate who gets the deposit if the home purchase falls through.

At American Commerce Mortgage, we answer questions about this process every day. Give us a call: 714-970-9700.

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