What to Avoid During your 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. There are still a few major hurdles to jump before closing. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't make expensive purchases. You may be itching to buy that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to stay away from making big ticket purchases like furniture, appliances, jewelry, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to purchase big-ticket items can also be a mistake: most lending institutions take into consideration your available cash when approving your loan.
Don't go on a career search. Your recent career history should show stability. Finding a new job (particularly one with a bigger paycheck) may not hinder your ability to qualify for a loan. But in some cases, changing careers during the mortgage application process may bring concern and affect your application.
Don't change banks or move money around in your bank accounts. While your lending institution reviews your mortgage loan package, you will likely be asked to submit bank statements for recent months for your saving and checking accounts, money market funds and other liquid assets. Your lender looks for a consistent rise and fall of your money over the month, in order to rule out fraud. No matter the reason, moving banks or moving money from one account to another could raise a red flag with your lender and slow your loan process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith deposit belongs to you, not the seller until closing. Some sellers might not know that these good faith funds must be used for your expenses at closing. It's wise to put the funds into a trust account, or get a neutral person, like an attorney to hold them until closing. The disposition of earnest funds, in the case of a failed transaction, should be written in the purchase agreement with the seller.
Firelight Mortgage Consultants can walk you through the pitfalls of getting a mortgage. Call us: (303) 228-2254.