What to Avoid During your Home Purchase
What's better than buying a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before closing can be an error. Until your loan closes, there are still some hurdles to jump. We have listed some things below we suggest you stay away from when waiting for closing.
Don't empty your wallet on big-ticket items It may be tempting to order that new Turkish rug for the soon-to-be-yours living room, but it's advisable to avoid making major buys like furniture, appliances, jewelry, or cars until closing. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Because lending institutions are reviewing your financial accounts, a large cash purchase is also not advised.
Don't look for a new job. Lenders like to see a consistent job history on your application forms. Finding a new career (especially one with a better salary) may not change your ability to qualify for your mortgage loan. However, if you switch careers before your loan is approved, your loan process could fail or be slowed down.
Don't switch banks or move finances around in your accounts. Your lender will instruct the submission of recent bank statements for accounts in your name: savings, checking, money market, and other liquid assets. To detect fraud, lenders will need clear documentation of how you earn your money and where additional wealth comes from. Even for practical reasons, moving around cash or changing banks could make it difficult for your lender to document your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until closing. Any earnest money is to be applied to your expenses upon closing; a individual seller might not understand this. Find an attorney or other neutral party who is able to hang on to the deposit or place it in a trust account until you close. The final disposition of earnest money, if your sale fails, should be specified in the contract with the seller.
Firelight Mortgage Consultants can walk you through the pitfalls of getting a mortgage. Give us a call at (720) 550-4235.