Things to Avoid While Purchasing a Home

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Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. Until closing, there still remain 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. Although you will be listing ways to turn your new house 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. You may send up red flags with your lender if you purchase new furniture on your credit cards in the middle of your loan process. It's even a red flag to make those huge purchases using cash. Lenders are examining your cash on hand when considering your loan.

Don't get a new career. Stability in your career history is a good thing to lending institutions. Getting a new job before you start the application process for a mortgage loan may not compromise your approval at all. However, switching jobs in the middle of the application process may influence your approval.

Don't take your accounts to a new bank or move around your cash. As the lender reviews your loan package, you will likely be asked to produce bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid wealth. To avoid potential fraud, most loans want a detailed paper trail to determine the source of all cash. Even for practical reasons, moving around cash or changing banks could make it harder for your lender to document your bank history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until closing, the good faith deposit remains yours. Although some individual sellers might not know this, any good faith funds must go toward your closing expenses. Find an attorney or other neutral person who can hold the funds or put them in a trust account until closing. If your home purchase fails, the contract with the seller should dictate where the earnest money should go.

I can answer questions about these "Don'ts" and many others. Call me: (619) 758-4035.