Don't Trip Yourself up While Buying your Home

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 furniture store. Until your loan closes, there still remain 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 throw your money around. Although you will be dreaming of ways to turn your new home into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until your loan closes. You may send up red flags with your lender if you finance new furniture on your credit cards in the middle of your loan process. Since lending institutions are reviewing your bank accounts, a large cash purchase is also not advised.

Don't get a new job. Lenders feel comfortable seeing a consistent work history on your application forms. Finding a new career (especially one with a better salary) may not change your ability to qualify for a mortgage. However, switching careers during the loan process may influence whether or not you are approved.

Don't move cash around or switch banks. Your lender will require you to provide recent bank statements on all of your accounts: checking, savings, money market, and other liquid assets. The lender looks for a consistent rise and fall of your funds over the pay period, in order to avoid fraud. No matter the purpose, changing banks or transferring funds may raise a red flag with your lender and impede your application process.

Don't give cash directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. As a rule, your good faith money belongs to you, not to the seller until the deal closes. Although your seller may not know this, any good faith money must be applied to the buyer's closing expenses. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until you close. Should your home purchase fail, your purchase agreement should dictate to whom your earnest money should go.

At American Commerce Mortgage, we answer questions about this process every day. Call us at 714-970-9700.

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