What to Avoid During a Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. It's best to remember that until closing, your lender is watching your accounts very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to order that new Turkish rug for the soon-to-be-yours living room, but it's best to stay away from making large buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. It's also a red flag to make those huge purchases with cash. Lenders are looking at your available cash when considering your loan.
Don't get a new career. Lending Institutions feel comfortable seeing a consistent career history on your application. Getting a new career before you apply for a loan may not get in the way of your approval at all. However, switching jobs in the middle of the loan process could affect whether or not you are approved.
Don't change banks or move finances around in your bank accounts. Most lenders will ask for recent bank statements of your accounts: checking, savings, money market, and other assets. To eliminate potential fraud, most lending institutions need detailed paperwork to determine the source of all cash. Even for innocent purposes, moving around finances or changing banks might make it harder for the lender to document your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until closing, any good faith deposit actually belongs to you. Any earnest money is to go toward your expenses upon closing; some FSBO sellers might not understand this. Find a lawyer or other neutral person who will hold the funds or put them in a trust account until you close. The contract should indicate who keeps the earnest funds if the home purchase fails.
At Firelight Mortgage Consultants, we answer questions about this process every day. Call us at (303) 228-2254.