What to Avoid During a Home Purchase

What's more fun than getting a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before your loan closes can be an error. It's best to remember that until closing, your lender is watching you very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until the loan closes. Your lender may send up red flags if you buy your appliances on your credit cards during your loan process. Since lending institutions are looking closely at your financial accounts, a large cash purchase is also a bad idea.

Don't go on a job search. Lending Institutions feel comfortable seeing a consistent job history on your paperwork. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are improving your salary. However, getting a new job during your application process may affect whether or not you are approved.

Don't switch banks or move cash around in your accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will be studied as the lender considers your approval. To detect potential fraud, most lending institutions require detailed paperwork to document the source of all funds. No matter the purpose, moving banks or transferring money can raise a red flag with your lender and slow your qualification process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Some FSBO sellers might not know that this good faith money must be applied to your expenses at closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until the deal closes. If your transaction fails, your contract with the seller should document to whom the good faith funds should go.

Alliance One Mortgage can answer questions about these "Don'ts" and many others. Call us at 626-363-9246.

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