What to Avoid During a Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. Until your loan closes, there still remain some hurdles to jump. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't overspend on big-ticket items Although you will be listing ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until the closing of your loan. You may send up red flags with your lender if you finance your electronics on your credit cards in the middle of your loan process. Since lenders are examining your financial accounts, a large cash purchase is also a mistake.
Don't go on a career search. Your recent work history should show stability. Getting a new job before you start the application process for a mortgage loan may not affect your approval at all. But for some people, changing jobs during the mortgage approval process may raise concern and affect your application.
Don't switch banks or move money around in your bank accounts. Bank statements from recent months for your accounts (savings, checking, money market, and others) will probably be reviewed as the lender makes decisions regarding your application. The lending institution looks for a consistent rise and fall of your funds each pay period, in order to rule out fraud. Changing banks or transferring funds to another account - for whatever reason - may make it harder for your lender to review your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until the completion of the deal, any good faith deposit actually belongs to you. Although some individual sellers may not understand this, your good faith money should go toward your closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. The contract should specify to whom the deposit goes if the home purchase fails.
At Mutual Security Mortgage, we answer questions about this process every day. Call us at (303) 931-7879.