What to Avoid During your Home Purchase
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Until your loan closes, there still remain some hoops to jump through. We have listed some actions below you will want to stay away from when waiting for closing.
Don't empty your wallet on big-ticket items Although you will be planning ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until the closing of your loan. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Since lending institutions are perusing your financial accounts, a large cash purchase is also a mistake.
Don't look for a new career. Your recent job history should show stability. Getting a new career before you start the application process for a mortgage loan may not jeopardize your approval at all. However, switching careers during the loan process may influence whether or not you are approved.
Don't take your accounts to a new bank or move around your money. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other accounts) will be studied as the lender makes decisions regarding your application. Your lending institution is looking for a consistent rise and fall of your money over the month, in order to avoid fraud. Changing banks or transferring funds elsewhere - even if its merely to consolidate funds - could hinder the documentation of your funds.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Some sellers might not realize that the good faith money is to go toward your expenses upon closing. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. Should your sale fall through, your purchase agreement should document where the good faith deposit should go.
Tenby J. Dahman can walk you through the pitfalls of getting a mortgage. Call us at (303) 862-7760.