Don't Trip Yourself up While Buying a Home

What's better than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. There still remain a few major hurdles to jump before closing. Below you'll find a list of actions to avoid during this critical time of your home purchase.

Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Using plastic to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Using cash to buy big-ticket items can also be a bad idea: many lenders look at your available cash when approving your application.

Don't look for a new career. Stability in your job history is a positive thing to banks and other lenders. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. However, switching jobs in the middle of your loan process might influence whether or not you are approved.

Don't move cash around or change banks. Bank statements from the last few months for all of your accounts (checking, savings, money market, and other accounts) will probably be reviewed as the lender makes decisions regarding your application. To detect potential fraud, most lending institutions require thorough paperwork to verify the source of all cash. Changing banks or moving funds elsewhere - for whatever reason - may hinder the documentation of your accounts.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money belongs to you, not to the seller until closing. Although your FSBO seller may not know this, any good faith funds should be applied to your closing expenses. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the deal closes. Your purchase contract should indicate who gets the earnest funds if the transaction fails.

At Firelight Mortgage Consultants, we answer questions about this process every day. Give us a call at (303) 228-2254.

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