What to Avoid During a Home Purchase

What's better than buying a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before closing can be harmful. It's wise to remember that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't buy big-ticket items. You may be itching to buy that new sofa for the soon-to-be-yours den, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or cars until closing. Financing new furniture 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 big-ticket items can also create a bad idea: many lending institutions look at your available cash when approving your mortgage loan.

Don't get a new job. Consistency in your career history is a positive thing to lending institutions. Getting a new career before you apply for a mortgage may not jeopardize your approval at all. But for some, switching jobs during the loan application process could bring concern and affect your approval.

Don't switch your accounts to a new bank or move around your money. While the lender considers your mortgage loan package, you will probably be instructed to produce bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid wealth. To detect potential fraud, most lenders require a thorough paper trail to determine the source of all cash. Switching banks or transferring funds to another account - no matter the purpose - could hinder the review of your funds.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith deposit actually belongs to you. A FSBO seller might not realize that your good faith money should go toward your expenses upon closing. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until you close. The final disposition of good faith money, if your transaction fails, should be written in the purchase agreement with the seller.

Asset Alliance Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at (760) 632-7701.

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