Don't Trip Yourself up While Buying your New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before closing. We have listed some actions below we suggest you avoid when waiting for closing.

Don't throw your money around. You may be tempted to order that new couch for the soon-to-be-yours living room, but it's best to avoid making major buys like furniture, appliances, jewelry, or vacations until your home loan closes. Using credit cards to buy furniture could jeopardize your loan process by distorting your numbers. It's even a red flag to make those big-ticket purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.

Don't get a new job. Lending Institutions feel comfortable seeing a consistent work history on your application forms. Getting a new job may not compromise your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, switching jobs in the middle of your loan process might affect whether or not you are approved.

Don't move cash around or change banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will likely be reviewed as the lender makes decisions regarding your mortgage application. The lender is looking for a steady flow of your funds each pay period, in the interest of avoiding fraud. No matter the purpose, switching banks or transferring money could raise a red flag with your lender and slow down your loan process.

Don't give funds directly to your seller (usually in cases of "for sale by owner") for earnest money. As a rule, your good faith money belongs to you, not to the seller up until the deal closes. The FSBO seller may not know that these good faith funds should be applied to your expenses at closing. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until you close. The disposition of earnest money, in the case of a failed transaction, should be specified in the purchase agreement with your seller.

The Reen Team at American Pacific Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (408) 626-1879.

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