Things to Avoid While Purchasing a Home

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With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. It's wise to remember that until closing, your lender is watching your accounts very closely. Here are some actions to stay clear of before closing to be sure your transaction goes well.

Don't make expensive purchases. It may be tempting to buy that new sofa for the soon-to-be-yours den, but it's advisable to avoid making large purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing new Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Because lenders are reviewing your financial accounts, a large cash purchase is also not advised.

Don't get a new job. Your recent work history should show stability. Getting a new career before you start the application process for a mortgage loan may not jeopardize your approval at all. But for some, switching jobs during the mortgage approval process may raise concern and stymie your approval.

Don't move finances around or switch banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will likely be studied as the lending institution considers your approval. Your lender is looking for a steady flow of your funds over the month, in order to avoid fraud. No matter the purpose, moving banks or transferring money might raise a red flag with the lender and slow down your qualification process.

Don't give money directly to your seller (generally in cases of "for sale by owner") to be considered a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although your seller might not know this, your good faith funds must go toward your closing expenses. A neutral party, like an attorney can hang onto your earnest funds, or you may place them temporarily into a trust account until closing. The disposition of good faith funds, if your home purchase fails, should be documented in the purchase agreement with the seller.

American Success Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 1-888-942-8272.