What to Avoid During your Home Purchase

What's better than getting a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.

Don't make expensive purchases. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until your loan closes. Your lender may send up red flags if you finance your electronics on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also be a problem: many banks take into consideration your available cash when approving your loan.

Don't go on a job search. Lending Institutions like to see a consistent work history on your paperwork. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a better salary. But for some, getting a new job during the mortgage application process may bring concern and hinder your application.

Don't switch banks or move cash around in your bank accounts. Your lending institution will require you to produce recent bank statements for all of your accounts: savings, checking, money market, and other liquid assets. To avoid potential fraud, most lending institutions require a thorough paper trail to verify the source of all incoming funds. Even for practical reasons, moving around funds or switching banks may make it harder for the lender to document your account history.

Don't hand over earnest money 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 transaction is final. Your earnest funds are to be used for your expenses closing; some individual sellers might not know this. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until you close. The disposition of good faith money, if your home purchase falls through, should be specified in the contract with your seller.

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