Don't Trip Yourself up While Buying a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. 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 stay away from during this critical time of your home purchase.
Don't buy luxury items. Although you will be dreaming of ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until your loan closes. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. Using cash to purchase big-ticket items can even create a mistake: many lending institutions look at your available cash when approving your application.
Don't get a new career. Consistency in your work history is a good thing to banks and other lenders. Getting a new career before you apply for a loan may not jeopardize your approval at all. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't move finances around or switch banks. Bank statements from the last few months for your accounts (savings, checking, money market, and others) will likely be reviewed as the lending institution considers your mortgage application. To avoid potential fraud, most loans want detailed paperwork to verify the source of all cash. Changing banks or moving money to another account - even if its merely to pool funds - might hinder the review of 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 up until the sale is final. Although some individual sellers may not realize this, your good faith funds must be used for your closing expenses. Get a lawyer or other neutral party who can hold the funds or place them in a trust account until closing. The purchase agreement should dictate who gets the deposit if the home purchase falls through.
Tenby J. Dahman can walk you through the pitfalls of getting a mortgage. Call us at (303) 862-7760.