What to Avoid During a Home Purchase

What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Until the house is really yours, there are still some hoops to jump through. We have given you a list of actions below you will want to avoid when waiting for your loan to close.

Don't make expensive purchases. You may be tempted to order that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making large buys like furniture, appliances, electronic equipment, or vacations until closing. You may send up red flags with your lender if you finance your electronics on your credit cards during your loan process. It's even a mistake to make those big purchases using cash. Lenders are examining your cash on hand when considering your loan.

Don't go on a job search. Lending Institutions feel comfortable seeing a consistent career history on your application forms. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are improving your salary. However, switching jobs in the middle of the approval process may affect your approval.

Don't switch banks or move finances around in your accounts. Most lenders will ask for recent bank statements for accounts in your name: savings, checking, money market, and other assets. Your lender looks for a steady flow of your money over the month, in the interest of ruling out fraud. Even for innocent reasons, moving around money or changing banks could make it more difficult for your lending institution to document your bank history.

Don't give cash directly to your seller (usually in the case of of "for sale by owner") for a "good faith" deposit. As a rule, your good faith deposit belongs to you, not the seller until the sale is final. Although your FSBO seller might not understand this, any good faith funds must be used for the buyer's closing expenses. An attorney or other type of neutral party can hold onto your earnest money, or you may put it temporarily into a trust account until closing. Your contract should specify who keeps the deposit if the home purchase fails.

Lighthouse Mortgage Company can answer questions about these "Don'ts" and many others. Call us: (916) 434-8915.

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