What to Avoid During a Home Purchase
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. There still remain a few major hurdles to jump before your loan closes. Here are some actions to avoid before closing to be sure the transaction goes well.
Don't overspend 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 big purchases like furniture, cars, appliances, or vacations until the loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Because lending institutions are perusing your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Lending Institutions look for a consistent career history on your application. Finding a new career (especially one with a bump in salary) may not change your ability to qualify for a mortgage. But in some cases, changing careers during the mortgage loan approval process may bring concern and affect your application.
Don't move finances around or switch banks. Bank statements from recent months for your accounts (checking, savings, money market, and others) will probably be studied as the lender makes decisions regarding your approval. To avoid potential fraud, most lenders want detailed paperwork to document the source of all funds. No matter the reason, changing banks or moving money from one account to another could raise a red flag with your lender and slow your loan process.
Don't give cash directly to your seller (usually in cases of "for sale by owner") to be used as a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until closing. Any earnest money is to go toward your expenses upon closing; some individual sellers might not know this. It's advisable to put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. The contract should document who gets the deposit if the home purchase falls through.
Mutual Security Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: (303) 931-7879.