Don't Trip Yourself up While Buying your New Home

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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. There still remain a few major hurdles to jump before your loan closes. Here are some actions to stay clear of before closing to be sure your transaction goes well.

Don't empty your wallet on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until your loan closes. You may send up red flags with your lender if you finance new appliances on your credit cards during your loan process. Using cash to purchase big items can also be an issue: most lending institutions look at your available cash when approving your mortgage.

Don't get a new career. Consistency in your work history is a positive thing to lending institutions. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are improving your salary. However, if you switch careers before approval, your mortgage process could fail or be bogged down.

Don't move money around or change banks. As the lending institution considers your mortgage loan package, you will probably be asked to produce bank statements for recent months on your checking accounts, savings accounts, money market accounts and other liquid wealth. Your lending institution needs to see a consistent flow of your money over the pay period, in the interest of avoiding fraud. Switching banks or transferring money elsewhere - for whatever purpose - may make it harder for your lender to document your funds.

Don't give funds directly to your seller (generally in the case of of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Some FSBO sellers might not realize that these good faith funds is to be used for your expenses upon closing. Find an attorney or other neutral person who is able to hold the funds or put them in a trust account until closing. Should your home purchase fail, your purchase contract should dictate to whom the good faith deposit should go.

Don't do work on the house prior to the close of escrow.  If you enter a house without permission it is trespassing and you could be prosecuted.  More likely is the fact that if you put your money into work on a home and something happens where you can't purchase the home you will lose that money.  Also there is no insurance on that home in your name so if something happens to the house while working on it you could be sued by the seller even if it is a short sale or a foreclosure.

MAE Capital Mortgage can answer questions about these "Don'ts" and many others. Call us: 916-783-8800.