What to Avoid During your Home Purchase

What's more fun than getting a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before your loan closes can be a mistake. Until the house is really yours, there still remain some hoops to jump through. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't buy luxury items. Although you will be dreaming of ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and car purchases 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. Using cash to purchase big items can also create a problem: most lenders consider your available cash when approving your mortgage loan.

Don't get a new career. Stability in your work history is a positive thing to lenders. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are getting a better salary. However, switching careers during the loan process may affect your approval.

Don't change banks or move finances around in your accounts. While your lending institution reviews your mortgage loan package, you will probably be asked to provide bank statements for recent months on your saving and checking accounts, money market accounts and other liquid assets. Your lending institution will need to see a steady rise and fall of your money each pay period, in order to avoid fraud. No matter the purpose, switching banks or transferring money can raise a red flag with your lender and slow your application process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until closing, the good faith deposit actually belongs to you. Although your FSBO seller may not understand this, any good faith money should be applied to your closing expenses. A neutral party, like an attorney can hold your earnest money, or you may put it temporarily into a trust account until you close. The disposition of good faith money, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.

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

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