What to Avoid During your Home Purchase
What's better than getting a bunch of new furnishings to go in your future home? Not much. But making big purchases before your loan closes can be an error. Until closing, there are still some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items You may be tempted to order that new Turkish rug for the soon-to-be-yours parlor, but it's best to stay away from making big ticket purchases like furniture, appliances, jewelry, or cars until closing. Using plastic to buy new living room furniture could jeopardize your loan process by distorting your numbers. It's even a mistake to make those big-ticket purchases using cash. Lending Institutions are examining your available cash when considering your loan.
Don't get a new career. Stability in your job history is a good thing to lending institutions. Getting a new job before you start the application process for a loan may not compromise your approval at all. However, getting a new job during the loan process could influence your approval.
Don't switch your accounts to a new bank or move around your finances. While your lending institution considers your loan package, you will probably be asked to produce bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid finances. In order to eliminate fraud, lenders require clear documentation of how you earn your living and where any additional money comes from. No matter the reason, moving banks or moving money from one account to another might raise a red flag with the lender and slow your qualification process.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Although some individual sellers may not know this, your good faith money must be used for the buyer's closing expenses. You'll need to put the funds into a trust account, or get an attorney to hold them until closing. Should your sale fall through, the purchase agreement should dictate where the earnest money should go.
Mutual Security Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (303) 931-7879.