Things to Avoid While Buying a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until closing, your lender is watching your accounts very closely. We have given you a list of actions below we suggest you avoid when waiting for closing.

Don't overspend on big-ticket items Although you will be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. It's even a red flag to make those huge purchases with cash. Lending Institutions are looking at your available cash when considering your loan.

Don't look for a new job. Lenders feel comfortable seeing a consistent career history on your paperwork. Getting a new job may not compromise your ability to qualify for a loan - especially if you are getting a bigger paycheck. But for some, switching jobs during the mortgage loan approval process may raise concern and hinder your application.

Don't move cash around or switch banks. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and others) will be studied as the lender considers your approval. To eliminate potential fraud, most lenders require a detailed paper trail to document the source of all funds. No matter the purpose, changing banks or moving money from one account to another could raise a red flag with the lender and slow down your application process.

Don't give 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 is actually yours until the sale closes. Although your seller might not know this, the good faith money must be used for your closing expenses. Get an attorney or other neutral person who will hang on to the funds or place them in a trust account until you close. The final disposition of good faith funds, if your sale falls through, should be documented in the contract with the seller.

At American Mortgage Advisers, Inc, we answer questions about this process every day. Call us at 2147390569.