Things to Avoid While Buying a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Keep in mind that until closing, your lender is watching your accounts very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy big-ticket items. Although you will be dreaming of ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Using cash to buy big-ticket items can even create a problem: many lenders look at your cash on hand when approving your mortgage loan.
Don't look for a new career. Your recent job history should show stability. Getting a new career before you start the application process for a mortgage loan may not compromise your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be slowed down.
Don't move money around or switch banks. As the lending institution considers your loan application, you will likely be instructed to produce bank statements for the last few months on your checking and savings accounts, money market funds and other liquid assets. To avoid potential fraud, most lenders want detailed paperwork to verify the source of all cash. No matter the purpose, moving banks or transferring money might raise a red flag with the lender and impede your application process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller up until closing. A FSBO seller may not realize that any good faith money must be used for your expenses upon closing. Find a lawyer or other neutral party who will hang on to the deposit or place it in a trust account until closing. The purchase agreement should specify where the money goes if the transaction falls through.
Firelight Mortgage Consultants can answer questions about these "Don'ts" and many others. Call us: (303) 228-2254.