What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Because lending institutions are perusing your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Your recent work history should show stability. Finding a new job (especially one with a bump in salary) may not change your ability to qualify for your mortgage. But for some people, switching jobs during the mortgage application process may bring concern and stymie your application.
Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will be reviewed as the lender makes decisions regarding your mortgage application. To eliminate potential fraud, most lending institutions require a thorough paper trail to determine the source of all cash. Even for practical purposes, moving around funds or changing banks may make it more difficult for your lending institution to confirm your account history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money belongs to you, not the seller until closing. Some sellers might not know that any good faith money should go toward your expenses upon closing. A neutral party, like an attorney can hang onto your deposit, or you may put it temporarily into a trust account until closing. Should your home purchase fail, the purchase contract should indicate to whom your good faith deposit should go.
Mutual Security Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at (303) 931-7879.