What to Avoid During your 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 lender approves their loan. Until closing, there still remain some hoops to jump through. Here are some actions to refrain from before closing to be sure your transaction goes well.
Don't buy luxury items. Although you may be planning ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and car purchases until the closing of your loan. Your credit numbers could change suddenly if you make a huge purchase using plastic. It's also a bad idea to make those big-ticket purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't get a new job. Consistency in your career history is a good thing to banks and other lenders. Finding a new career (particularly one with a bump in salary) may not affect your ability to qualify for a mortgage loan. But for some, changing careers during the loan approval process could raise concern and hinder your application.
Don't take your accounts to a new bank or move around your money. As the lending institution reviews your loan package, you will probably be required to produce bank statements for recent months for your saving and checking accounts, money market accounts and other liquid finances. In order to detect fraud, lenders require clear documentation of how you earn your living and where any additional wealth comes from. Switching banks or moving money to another account - even if its merely to consolidate funds - may make it difficult for your lender to review your funds.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until the deal closes. The earnest money is to go toward your expenses upon closing; some sellers might not realize this. Find an attorney or other neutral person who can hang on to the funds or place them in a trust account until you close. If your transaction fails, your contract with the seller should specify to whom the good faith funds should go.
At Mutual Security Mortgage, we answer questions about this process every day. Give us a call: (303) 931-7879.