What to Avoid During your Home Purchase

What's better than buying a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. There are still a few major hurdles to jump before closing. We have given you a list of actions below we suggest you avoid when waiting for closing.

Don't buy big-ticket items. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy new living room furniture could compromise your loan process by altering your numbers dramatically. Using cash to purchase expensive items can even be a mistake: many banks consider your available cash when approving your mortgage loan.

Don't look for a new job. Consistency in your job history is a positive thing to banks and other lenders. Finding a new job (particularly one with a better paycheck) may not affect your ability to qualify for your mortgage loan. But in some cases, getting a new career during the mortgage approval process might bring concern and stymie your approval.

Don't change banks or move finances around in your bank accounts. Most lenders will ask for recent bank statements for your accounts: checking, savings, money market, and other assets. To detect fraud, lenders need a consistent portrayal of how you earn your money and where any additional money comes from. No matter the purpose, switching banks or moving funds from one account to another could raise a red flag with your lender and slow your loan process.

Don't deliver a "good faith" deposit 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 closing. Although some individual sellers may not understand this, the good faith money should be applied to the buyer's closing expenses. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the deal closes. Should your sale fall through, the contract with the seller should document to whom the good faith deposit should go.

Sanborn Financial can answer questions about these "Don'ts" and many others. Call us at (760) 943-7200.