What to Avoid During a Home Purchase

What's better than getting a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until your loan closes, there are still some hoops to jump through. Below you'll find a list of things to avoid during this crucial time of your home purchase.

Don't make expensive purchases. You may be tempted to order that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to avoid making major purchases like furniture, appliances, electronic equipment, or cars until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. Using cash to purchase expensive items can also create an issue: most banks consider your cash on hand when approving your loan.

Don't look for a new job. Stability in your work history is a positive thing to lenders. Changing jobs may not compromise your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. However, finding a new job in the middle of your approval process may affect your approval.

Don't change banks or move money around in your accounts. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other assets) will likely be studied as the lender considers your application. To detect potential fraud, most lenders need detailed paperwork to verify the source of all cash. Even for practical purposes, moving around finances or switching banks might make it harder for your lender to document your bank 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 remains yours until closing. Although your seller might not understand this, any earnest money should be applied to the buyer's closing expenses. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until closing. The contract should dictate who keeps the deposit if the transaction falls through.

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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