What to Avoid During a Home Purchase

What's better than buying a bunch of new furnishings to go in your future home? Nothing. But making big ticket purchases before your loan closes could be trouble. It's wise to remember that until closing, your lender is watching your accounts very closely. Here are some actions to avoid before closing to be sure the transaction goes smoothly.

Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Using cash to purchase big-ticket items can also create a bad idea: many lending institutions look at your cash on hand when approving your mortgage loan.

Don't get a new career. Consistency in your work history is a good thing to banks and other lenders. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, switching jobs during your application process may influence your approval.

Don't take your accounts to a new bank or move around your cash. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other accounts) will likely be analyzed as the lender makes decisions regarding your loan application. In order to eliminate fraud, lenders look for a clear and consistent picture of how you earn your living and where additional wealth comes from. Switching banks or transferring finances elsewhere - for whatever reason - might make it harder for the lender to review your funds.

Don't give funds directly to your seller (commonly in the case of of "for sale by owner") to be considered earnest money. As a rule, your good faith money is yours, not the seller's up until closing. Although your seller may not realize this, any good faith money should be used for your closing expenses. Find an attorney or other neutral person who is able to hang on to the deposit or place it in a trust account until closing. The contract should specify to whom the funds go if the transaction does not go through.

Asset Alliance Mortgage can answer questions about these "Don'ts" and many others. Call us: (760) 632-7701.