Don't Trip Yourself up While Buying a Home
What's more fun than getting a bunch of new stuff to adorn your future home? Not much. But making big purchases before your loan closes can be an error. There are still a few major hurdles to jump before closing. We have given you a list of 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 turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy new living room furniture could jeopardize your loan process by distorting your numbers. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.
Don't look for a new career. Lending Institutions look for a consistent career history on your paperwork. Getting a new job may not compromise your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, switching careers during the loan process could influence your approval.
Don't move money around or switch banks. Your lending institution will ask for recent bank statements for your accounts: savings, checking, money market, and other liquid assets. Your lending institution is looking for a steady rise and fall of your funds over the month, in the interest of ruling out fraud. No matter the purpose, changing banks or transferring funds might raise a red flag with the lender and slow down your application process.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the earnest money actually belongs to you. Although some individual sellers may not know this, your earnest money must be applied to the buyer's closing expenses. It's wise to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. The contract should document where the funds go if the home purchase falls through.
At Foxfield Financial, we answer questions about this process every day. Call us at 720-598-8300.