What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before the keys are handed over. Here are some things to refrain from during the home buying process to be sure your transaction goes well.
Don't buy big-ticket items. You may be itching to order that new easy-chair for the soon-to-be-yours den, but it's best to avoid making big ticket buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your lender may send up red flags if you finance your appliances on your credit cards in the middle of your loan process. Using cash to purchase expensive items can even create an issue: many lending institutions consider your available cash when approving your application.
Don't look for a new job. Lending Institutions like to see a consistent career history on your application forms. Finding a new job (particularly one with a better paycheck) may not change your ability to qualify for a mortgage loan. However, getting a new career during the application process might affect whether or not you are approved.
Don't move money around or change banks. Bank statements from the last two or three months for your accounts (checking, savings, money market, and other assets) will probably be analyzed as the lending institution makes decisions regarding your approval. To detect potential fraud, most lending institutions need detailed paperwork to document the source of all cash. Even for practical purposes, moving around money or switching banks might make it harder for the lender to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith money does not belong to the seller: it remains yours until closing. Some FSBO sellers may not realize that any good faith funds must be applied to your expenses upon closing. We recommend that you put the money into a trust account, or get an attorney to hold it until closing. The final disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
Tenby J. Dahman can walk you through the pitfalls of getting a mortgage. Give us a call: (303) 862-7760.