Don't Trip Yourself up While Buying a Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves the loan. It's best to remember that until you get the keys, your lender is watching your finances very closely. We have given you a list of actions below we suggest you stay away from when waiting for closing.
Don't buy luxury items. Although you will be planning ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Using plastic to buy furniture could compromise your loan process by changing your numbers dramatically. It's also a bad idea to make those big purchases with cash. Lenders are examining your cash on hand when considering your loan.
Don't get a new career. Lenders like to see a consistent work history on your application forms. Finding a new job (especially one with a bigger salary) may not change your ability to qualify for a loan. But for some people, changing careers during the mortgage loan approval process might bring concern and stymie your application.
Don't move finances around or switch banks. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other assets) will probably be studied as the lender considers your application. Your lender looks for a consistent rise and fall of your funds each month, in order to avoid fraud. No matter the purpose, switching banks or transferring money could raise a red flag with the lender and slow your approval process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller up until closing. Any good faith funds are to go toward your expenses closing; some individual sellers may not realize this. Find an attorney or other neutral person who will hang on to the funds or put them in a trust account until you close. The final disposition of earnest funds, in the case of a failed transaction, should be specified in the contract with your seller.
Mutual Security Mortgage can answer questions about these "Don'ts" and many others. Call us at (303) 931-7879.