Don't Trip Yourself up While Buying your New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. It's best to remember that until your keys are in hand, your lender is watching you very closely. Here are some actions to refrain from before closing to be sure the transaction goes smoothly.
Don't buy luxury items. You may be itching to buy that new Turkish rug for the soon-to-be-yours den, but it's advisable to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until closing. You may send up red flags with your lender if you buy new furniture on your credit cards in the middle of your loan process. Since lenders are perusing your financial accounts, a large cash purchase is also a mistake.
Don't go on a career search. Stability in your job history is a positive thing to lenders. Getting a new job before you apply for a mortgage may not affect your approval at all. But for some, getting a new career during the mortgage application process might raise concern and stymie your application.
Don't move finances around or change banks. Bank statements from the last few months for accounts in your name (savings, checking, money market, and others) will be reviewed as the lender makes decisions regarding your application. In order to avoid fraud, lenders need a clear and consistent picture of how you earn your living and where any additional funds come from. Even for innocent reasons, transferring money or switching banks could make it more difficult for your lender to document your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any earnest money remains yours. Although your FSBO seller may not understand this, the good faith money should be used for the buyer's closing expenses. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until you close. The contract should document to whom the funds go if the home purchase falls through.
At Firelight Mortgage Consultants, we answer questions about this process every day. Give us a call: (303) 228-2254.