Things to Avoid While Buying a Home

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Until your loan closes, there still remain some hoops to jump through. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't buy big-ticket items. You may be tempted to buy that new couch for the soon-to-be-yours living room, but it's best to avoid making big ticket buys like furniture, appliances, electronic equipment, or cars until closing. Your lender may send up red flags if you purchase new electronics on your credit cards in the middle of your loan process. Using cash to purchase big items can even create a mistake: most banks look at your available cash when approving your application.

Don't look for a new career. Lending Institutions feel comfortable seeing a consistent job history on your application forms. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, switching careers in the middle of your application process could influence whether or not you are approved.

Don't switch banks or move money around in your bank accounts. As the lender reviews your loan package, you will likely be instructed to submit bank statements for recent months on your checking accounts, savings accounts, money market funds and other liquid finances. The lending institution looks for a consistent rise and fall of your money each month, in the interest of avoiding fraud. Even for innocent reasons, transferring cash or switching banks might make it difficult for the lender to confirm your account history.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the completion of the deal, any good faith deposit remains yours. Although your FSBO seller might not understand this, your good faith money must be applied to the buyer's closing expenses. Get a lawyer or other neutral person who will hang on to the funds or place them in a trust account until you close. The final disposition of earnest funds, if your home purchase falls through, should be specified in the purchase agreement with your seller.

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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