Don't Trip Yourself up While Buying your New Home

With the thrill 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 appliance store. It's wise to remember that until your keys are in hand, your lender is watching your accounts very closely. We have listed some actions below we suggest you avoid when waiting for closing.

Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, cars, appliances, or vacations until the loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a mistake to make those large purchases with cash. Lenders are examining your available cash when considering your loan.

Don't go on a career search. Lending Institutions feel comfortable seeing a consistent work history on your application forms. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are going to be making more money. But for some people, changing jobs during the mortgage loan approval process may bring concern and affect your approval.

Don't switch your accounts to a new bank or move around your money. As the lending institution considers your loan application, you will likely be instructed to produce bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid wealth. Your lender will need to see a steady rise and fall of your funds each month, in order to rule out fraud. No matter the purpose, changing banks or transferring funds can raise a red flag with the lender and slow your loan process.

Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Although some FSBO sellers might not know this, any earnest money should go toward the buyer's closing expenses. A neutral party, like an attorney can hang onto your deposit, or you may put it temporarily into a trust account until closing. If your sale falls through, your contract with the seller should indicate where this earnest money should go.

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

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