Things to Avoid While Purchasing a Home

What's more fun than getting a bunch of new furniture to adorn your future home? Not much. But making big purchases before closing can be harmful. Until your loan closes, there still remain some hurdles to jump. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't buy luxury items. You may be itching to buy that new Turkish rug for the soon-to-be-yours den, but it's best to avoid making major purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to purchase expensive items can also create a mistake: many lenders take into consideration your cash reserve when approving your mortgage.

Don't get a new job. Your recent job history should show consistency. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, if you switch careers before approval, your process could fail or be bogged down.

Don't switch your accounts to a new bank or move around your money. Bank statements from recent months for all of your accounts (checking, savings, money market, and other accounts) will probably be reviewed as the lender considers your loan application. The lending institution looks for a steady rise and fall of your money each pay period, in the interest of avoiding fraud. Even for innocent reasons, moving around money or changing banks may make it more difficult for the lender to document your bank history.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Your good faith money is to go toward your expenses closing; some sellers might not realize this. You'll need to put the funds into a trust account, or get a neutral party, like an attorney to hold them until closing. The purchase contract should indicate to whom the funds go if the transaction does not go through.

America's Money Source can walk you through the pitfalls of getting a mortgage. Call us at 4078987559.