Don't Trip Yourself up While Buying your Home
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 lender approves the loan. There still remain a few major hurdles to jump before your loan closes. We have listed some things below we suggest you stay away from when waiting for your loan to close.
Don't buy big-ticket items. You may be itching to buy that new sofa for the soon-to-be-yours living room, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or cars until closing. Using credit cards to buy new living room furniture could compromise your lending process by distorting your numbers. It's even a bad idea to make those big purchases using cash. Lenders are examining your cash on hand when considering your loan.
Don't look for a new career. Lending Institutions like to see a consistent job history on your application forms. Finding a new job (especially one with a better salary) may not jeopardize your ability to qualify for a mortgage. However, if you switch careers before your loan is approved, your loan process could fail or be bogged down.
Don't change banks or move cash around in your accounts. Bank statements from recent months for your accounts (savings, checking, money market, and other assets) will probably be reviewed as the lending institution considers your approval. The lender looks for a consistent flow of your money over the pay period, in order to avoid fraud. Changing banks or transferring finances elsewhere - for whatever reason - might hinder the documentation of your accounts.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's up until the deal closes. Although your seller might not know this, any good faith money must be used for your closing expenses. Get an attorney or other neutral party who can hang on to the funds or put them in a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be included in the purchase agreement with the seller.
Mutual Security Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (303) 931-7879.