Don't Trip Yourself up While Buying your Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. Although you will be dreaming of ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and car purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to buy big-ticket items can even create an issue: most banks look at your cash reserve when approving your mortgage loan.
Don't get a new career. Lenders like to see a consistent job history on your application. Getting a new career before you start the application process for a mortgage loan may not jeopardize your approval at all. But for some, changing jobs during the mortgage approval process might bring concern and affect your approval.
Don't move finances around or change banks. As your lending institution reviews your mortgage application, you will likely be instructed to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans want thorough paperwork to verify the source of all incoming funds. No matter the purpose, switching banks or transferring funds might raise a red flag with the lender and slow your application process.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Although your seller might not realize this, your good faith funds must be applied to the buyer's closing expenses. Get a lawyer or other neutral person who is able to hold the funds or put them in a trust account until closing. The final disposition of earnest funds, if your sale fails, should be written in the purchase agreement with your seller.
At Foxfield Financial, we answer questions about this process every day. Give us a call: 720-598-8300.