Things to Avoid While Purchasing a Home

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. Until your keys are in hand, there are still some hurdles to jump. Here are some actions to stay clear of before closing to assure your transaction goes smoothly.

Don't make expensive purchases. You may be tempted to buy that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's also a bad idea to make those large purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.

Don't go on a job search. Consistency in your career history is a good thing to lenders. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are improving your salary. But in some cases, getting a new job during the mortgage loan approval process could raise concern and stymie your application.

Don't take your accounts to a new bank or move around your money. Bank statements from the last two or three months for all of your accounts (checking, savings, money market, and other accounts) will likely be studied as the lending institution considers your loan application. To avoid potential fraud, most loans require a detailed paper trail to determine the source of all cash. No matter the purpose, switching banks or moving money from one account to another could raise a red flag with your lender and slow down your qualification process.

Don't give funds directly to your seller (usually in cases of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Your seller may not realize that these good faith funds is to be used for your expenses upon closing. Find a lawyer or other neutral party who will hang on to the deposit or place it in a trust account until closing. The disposition of earnest funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.

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

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