Things to Avoid While Buying a Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. Keep in mind that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to purchase big-ticket items can even create a mistake: many lending institutions take into consideration your cash on hand when approving your mortgage.
Don't get a new job. Lenders feel comfortable seeing a consistent job history on your application. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, if you switch careers before approval, your loan process could fail or be bogged down.
Don't change banks or move cash around in your accounts. As your lender reviews your mortgage loan package, you will probably be required to submit bank statements for the last two or three months on your saving and checking accounts, money market accounts and other liquid finances. The lending institution looks for a consistent rise and fall of your funds each month, in the interest of ruling out fraud. No matter the purpose, moving banks or moving money from one account to another may raise a red flag with your lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until the completion of the deal, the good faith deposit remains yours. The earnest money is to be used for your expenses closing; your individual seller may not understand this. Get a lawyer or other neutral party who will hang on to the funds or place them in a trust account until closing. The contract should indicate who gets the money if the transaction does not go through.
Tenby J. Dahman can answer questions about these "Don'ts" and many others. Give us a call at (303) 862-7760.