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 carrying their enthusiasm straight to the mall or appliance store. Until the house is really yours, there are still some hurdles to jump. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't buy luxury items. You may be tempted to buy that new Turkish rug for the soon-to-be-yours den, but it's advisable to avoid making big ticket buys like furniture, appliances, jewelry, or vacations until closing. Using plastic to buy furniture could jeopardize your loan process by distorting your numbers. Since lenders are examining your financial accounts, a large cash purchase is also not advised.

Don't go on a career search. Lenders feel comfortable seeing a consistent work history on your application. Changing jobs may not affect your ability to qualify for a mortgage loan - especially if you are getting a better salary. However, if you switch careers before you qualify, your loan process could fail or be stalled.

Don't switch banks or move cash around in your accounts. Most lenders will require you to produce recent bank statements for your accounts: savings, checking, money market, and other liquid assets. To avoid potential fraud, most lending institutions want detailed paperwork to verify the source of all funds. Even for practical reasons, transferring money or changing banks might make it difficult for the lending institution to verify your bank history.

Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's until the sale is final. Some FSBO sellers may not realize that the good faith funds must go toward your expenses upon closing. A neutral party, like an attorney can hold onto your earnest funds, or you may put them temporarily into a trust account until closing. If your sale falls through, your purchase agreement should indicate where this earnest money should go.

American Mortgage Services can answer questions about these "Don'ts" and many others. Call us at 9018401400.