Don't Trip Yourself up While Buying a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Keep in mind that until closing, your lender is watching you very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.

Don't overspend on big-ticket items You may be tempted to order that new sofa for the soon-to-be-yours parlor, but it's advisable to avoid making big ticket buys like furniture, appliances, electronic equipment, or vacations until closing. Using credit cards to buy new living room furniture could jeopardize your loan process by distorting your numbers. Since lending institutions are reviewing your financial accounts, a large cash purchase is also not advised.

Don't get a new career. Your recent job history should show consistency. Getting a new career before you apply for a mortgage loan may not get in the way of your approval at all. But for some people, changing jobs during the loan approval process could raise concern and hinder your application.

Don't move finances around or change banks. Bank statements from the last two or three months for all of your accounts (checking, savings, money market, and others) will probably be studied as the lender considers your approval. To avoid potential fraud, most lenders want a thorough paper trail to determine the source of all incoming funds. Even for practical purposes, moving around money or changing banks might make it difficult for the lender to confirm your bank history.

Don't give funds directly to your seller (generally in cases of "for sale by owner") for earnest money. As a rule, your good faith deposit is yours, not the seller's up until the sale is final. The good faith funds are to go toward your expenses upon closing; the individual seller may not realize this. A neutral party, like an attorney can hang onto your earnest funds, or you may place them temporarily into a trust account until you close. The contract should indicate where the funds go if the home purchase does not go through.

At The Reen Team at American Pacific Mortgage, we answer questions about this process every day. Call us at (408) 626-1879.

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