Things to Avoid While Buying a Home

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. We have given you a list of actions below we suggest you avoid when waiting for your loan to close.

Don't empty your wallet on big-ticket items It may be tempting to buy that new couch for the soon-to-be-yours living room, but it's advisable to stay away from making large buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase expensive items can also be a problem: most banks consider your available cash when approving your mortgage.

Don't get a new job. Lending Institutions feel comfortable seeing a consistent work history on your paperwork. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, finding a new career during your approval process may affect whether or not you are approved.

Don't switch banks or move finances around in your bank accounts. As your lender considers your mortgage loan application, you will probably be asked to submit bank statements for the last few months for your checking and savings accounts, money market funds and other liquid wealth. To detect potential fraud, most lenders want a detailed paper trail to verify the source of all incoming funds. Even for practical reasons, moving around funds or changing banks could make it difficult for the lending institution to confirm your account history.

Don't give money directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. Your earnest money does not belong to the seller: it is actually yours until the transaction is final. Although your FSBO seller may not know this, any good faith money must go toward your closing expenses. 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 good faith funds, in the case of a failed transaction, should be included in the purchase agreement with the seller.

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