What to Avoid During your Home Purchase
Some 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. It's wise to remember that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items It may be tempting to order that new couch for the soon-to-be-yours parlor, but it's advisable to stay away from making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Using plastic to buy furniture could compromise your lending process by distorting your numbers. Because lending institutions are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Stability in your career history is a positive thing to lending institutions. Getting a new career before you apply for a loan may not affect your approval at all. However, if you switch careers before approval, your loan process could fail or be slowed down.
Don't switch your accounts to a new bank or move around your finances. As the lender considers your mortgage package, you will likely be instructed to produce bank statements for the last two or three months for your checking accounts, savings accounts, money market funds and other liquid wealth. To detect potential fraud, most loans want thorough paperwork to document the source of all incoming funds. Changing banks or moving money to another account - no matter the reason - might hinder the review of your accounts.
Don't hand over 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 remains yours until closing. Any good faith money is to be used for your expenses upon closing; some FSBO sellers might not understand this. We recommend that you put the funds into a trust account, or get an attorney to hold them until the deal closes. If your sale falls through, your contract with the seller should document where this earnest money should go.
Mutual Security Mortgage can answer questions about these "Don'ts" and many others. Call us at (303) 931-7879.