Things to Avoid While Purchasing a Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before the house is realy yours. Here are some things to refrain from during the home buying process to be sure the transaction goes smoothly.
Don't buy luxury items. You may be itching to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making large purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Using credit cards to buy furniture could jeopardize your loan process by changing your numbers dramatically. It's also a bad idea to make those big-ticket purchases with cash. Lenders are examining your cash reserve when considering your loan.
Don't go on a job search. Stability in your work history is a positive thing to lending institutions. Getting a new job may not compromise your ability to qualify for a mortgage loan - especially if you are improving your salary. However, switching careers in the middle of the application process could influence whether or not you are approved.
Don't take your accounts to a new bank or move around your cash. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will be analyzed as the lender considers your mortgage application. The lender looks for a steady flow of your money over the pay period, in the interest of avoiding fraud. No matter the purpose, switching banks or transferring money could raise a red flag with your lender and slow down your application process.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith deposit belongs to you, not the seller until closing. The good faith money is to be applied to your expenses closing; some individual sellers may not understand this. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The final disposition of earnest money, if your sale falls through, should be specified in the contract with your seller.
Firelight Mortgage Consultants can answer questions about these "Don'ts" and many others. Call us: (303) 228-2254.