Things to Avoid While Buying a Home

What's better than buying a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before your loan closes can be an error. Until closing, there are still some hurdles to jump. Below you'll find a list of actions to stay away from during this critical time of your home purchase.

Don't overspend on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from major purchases like furniture, cars, appliances, or vacations until your loan closes. You may send up red flags with your lender if you finance your appliances on your credit cards in the middle of your loan process. Since lenders are reviewing your financial accounts, a large cash purchase is also a mistake.

Don't look for a new job. Consistency in your career history is a good thing to lenders. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, finding a new job during your approval process may affect your approval.

Don't switch your accounts to a new bank or move around your finances. While your lending institution considers your mortgage package, you will likely be required to provide bank statements for recent months for your checking and savings accounts, money market accounts and other liquid assets. In order to avoid fraud, lenders require a consistent portrayal of how you earn your money and where any additional funds come from. No matter the purpose, changing banks or transferring funds can raise a red flag with the lender and slow your approval process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until closing, the good faith deposit remains yours. Any earnest money is to go toward your expenses upon closing; some sellers may not realize this. It's advisable to put the deposit into a trust account, or get an attorney to hold it until the deal closes. The contract should document who gets the money if the transaction fails.

American Commerce Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at 714-970-9700.

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