Things to Avoid While Purchasing a Home

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What's more fun than buying a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Until the keys are handed over, there still remain some hurdles to jump. Here are some actions to avoid during the home buying process to be sure your transaction goes well.

Don't empty your wallet on big-ticket items Although you will be listing ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until your loan closes. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to buy big-ticket items can also be a problem: many lending institutions look at your cash reserve when approving your mortgage.

Don't get a new job. Stability in your career history is a good thing to lending institutions. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, if you switch careers before you qualify, your loan process could fail or be stalled.

Don't switch banks or move cash around in your accounts. Bank statements from recent months for accounts in your name (checking, savings, money market, and other assets) will likely be reviewed as the lending institution makes decisions regarding your loan application. The lender will need to see a steady flow of your funds over the month, in the interest of avoiding fraud. Even for practical purposes, moving around finances or changing banks might make it more difficult for the lending institution to verify your bank history.

Don't give funds directly to your seller (usually in cases of "for sale by owner") to be considered a "good faith" deposit. Your earnest money does not belong to the seller: it is actually yours until closing. Although some FSBO sellers may not understand this, the good faith funds must be used for your closing expenses. Find a lawyer or other neutral person who will hang on to the deposit or put it in a trust account until closing. Your contract should document who gets the money if the home purchase fails.

American Pacific Mortgage can answer questions about these "Don'ts" and many others. Call us: (209) 357-7000.

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