Things to Avoid While Buying a Home
What's more fun than buying a bunch of new stuff to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Until the house is really yours, there still remain some hurdles to jump. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't throw your money around. It may be tempting to order that new easy-chair for the soon-to-be-yours parlor, but it's best to stay away from making major purchases like furniture, appliances, electronic equipment, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's even a mistake to make those big-ticket purchases using cash. Lenders are examining your cash on hand when considering your loan.
Don't get a new job. Stability in your career history is a good thing to banks and other lenders. Getting a new job before you apply for a mortgage loan may not compromise your approval at all. However, switching jobs in the middle of your application process may affect whether or not you are approved.
Don't move finances around or switch banks. Your lender will ask for recent bank statements of your accounts: savings, checking, money market, and other liquid assets. 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. Switching banks or moving money elsewhere - no matter the purpose - could make it difficult for the lender to verify your funds.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's up until the sale is final. Your good faith funds are to be applied to your expenses upon closing; some sellers may not know this. A neutral party, like an attorney can hold onto your earnest funds, or you may place them temporarily into a trust account until you close. The contract should indicate where the deposit goes if the home purchase fails.
Tenby J. Dahman can walk you through the pitfalls of getting a mortgage. Call us: (303) 862-7760.