What to Avoid During a Home Purchase

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With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until your keys are in hand, there are still some hurdles to jump. We have listed some things below we suggest you avoid when waiting for closing.

Don't throw your money around. Although you may be planning ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to purchase big-ticket items can also be a mistake: many banks look at your available cash when approving your mortgage.

Don't go on a job search. Your recent job history should show consistency. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are going to be making more money. But for some, changing careers during the loan approval process may raise concern and affect your application.

Don't change banks or move cash around in your accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will likely be reviewed as the lending institution considers your application. To detect potential fraud, most lenders want a thorough paper trail to determine the source of all cash. Changing banks or transferring finances to another account - for whatever reason - could hinder the review of your funds.

Don't give money directly to your seller (generally in cases of "for sale by owner") to be considered a "good faith" deposit. As a rule, your earnest money belongs to you, not the seller until closing. Any earnest money is to go toward your expenses closing; some individual sellers might not realize this. You'll want to put the funds into a trust account, or get a neutral person, like an attorney to hold them until the deal closes. The final disposition of good faith money, if your sale fails, should be included in the contract with your seller.

Allstate Mortgage Company can walk you through the pitfalls of getting a mortgage. Call us at (707) 521-3434 Ext. 23.