Things to Avoid While Buying a Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. Until your keys are in hand, there are still some hoops to jump through. 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 may be dreaming of ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until the closing of your loan. You may send up red flags with your lender if you purchase new electronics on your credit cards in the middle of your loan process. Using cash to purchase expensive items can even create a mistake: most lenders consider your available cash when approving your mortgage.
Don't get a new career. Consistency in your career history is a positive thing to lenders. Getting a new career before you start the application process for a mortgage loan may not jeopardize your approval at all. However, switching careers in the middle of your application process might affect whether or not you are approved.
Don't move money around or switch banks. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will likely be reviewed as the lender makes decisions regarding your loan application. In order to eliminate fraud, lenders look for a consistent portrayal of how you earn your money and where any additional funds come from. Even for practical reasons, moving around funds or switching banks could make it harder for your lending institution to confirm your account history.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. Your earnest money does not belong to the seller: it remains yours until the sale closes. Although some individual sellers may not know this, your good faith money should go toward your closing expenses. An attorney or other type of neutral party can hold your earnest funds, or you may place them temporarily into a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be included in the contract with the seller.
Firelight Mortgage Consultants can answer questions about these "Don'ts" and many others. Call us: (720) 550-4235.