Things to Avoid While Purchasing a Home

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What's more fun than getting a bunch of new stuff to go in your future home? Not much. But buying big ticket items before closing could be trouble. There are still a few major hurdles to jump before your loan closes. Here are some actions to refrain from during the home buying process to be sure the transaction goes well.

Don't buy luxury items. You may be itching to order that new couch for the soon-to-be-yours den, but it's best to avoid making large purchases like furniture, appliances, jewelry, or vacations until closing. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. It's also a red flag to make those large purchases with cash. Lenders are looking at your cash on hand when considering your loan.

Don't go on a career search. Consistency in your job history is a positive thing to lenders. Changing jobs may not compromise your ability to qualify for a loan - especially if you are getting a better salary. But for some people, changing jobs during the mortgage loan approval process might raise concern and stymie your application.

Don't move finances around or change banks. While the lender considers your loan application, you will probably be asked to provide bank statements for recent months for your checking and savings accounts, money market funds and other liquid assets. To avoid fraud, lenders require a clear and consistent picture of how you earn your money and where additional money comes from. No matter the reason, switching banks or moving money from one account to another may raise a red flag with your lender and slow down your loan process.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith deposit belongs to you, not to the seller until closing. Although your seller might not realize this, any earnest money should be used for the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until closing. Should your home purchase fail, the contract with the seller should document where this earnest money should go.

Fidelity Bancorp can answer questions about these "Don'ts" and many others. Give us a call at (909) 476-3575.

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