What to Avoid During your Home Purchase

What's more fun than buying a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before your loan closes can be a mistake. There still remain a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to stay away from during this crucial time of your home purchase.

Don't empty your wallet on big-ticket items You may be itching to buy that new Turkish rug for the soon-to-be-yours parlor, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or vacations until closing. Your lender may send up red flags if you purchase new furniture on your credit cards in the middle of your loan process. Using cash to purchase expensive items can even be an issue: most lenders look at your cash reserve when approving your mortgage loan.

Don't get a new job. Stability in your work history is a good thing to lenders. Getting a new career before you start the application process for a mortgage may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.

Don't move cash around or switch banks. Your lender will instruct the submission of recent bank statements for accounts in your name: savings, checking, money market, and other liquid assets. To eliminate potential fraud, most loans require thorough paperwork to verify the source of all incoming funds. Even for practical purposes, transferring finances or changing banks might make it more difficult for your lending institution to document your account history.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Your good faith funds are to go toward your expenses closing; some individual sellers may not realize this. It's advisable to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. The disposition of earnest money, in the case of a failed transaction, should be written in the purchase agreement with the seller.

At AmeriBest Mortgage, we answer questions about this process every day. Call us: 3217777277.