What to Avoid During your Home Purchase
What's more fun than buying a bunch of new stuff to adorn your future home? Not much. But making large purchases before closing could be trouble. Until the keys are handed over, there still remain some hurdles to jump. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. Although you may be listing ways to turn your new home into a showplace, try to stay away from major 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 new living room furniture could compromise your lending process by changing your numbers dramatically. It's also a mistake to make those large purchases with cash. Lenders are examining your available cash when considering your loan.
Don't get a new career. Your recent job history should show consistency. Getting a new job before you apply for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before approval, your mortgage process could fail or be bogged down.
Don't switch banks or move finances around in your bank accounts. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will probably be analyzed as the lender makes decisions regarding your approval. To avoid fraud, lenders need a consistent portrayal of how you earn your living and where additional wealth comes from. No matter the purpose, moving banks or transferring money might raise a red flag with your lender and slow down your loan process.
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 your earnest money must go toward your expenses upon closing. A neutral party, like an attorney can hold onto your funds, or you may place them temporarily into a trust account until you close. Your purchase agreement should document to whom the funds go if the home purchase does not go through.
At Foxfield Financial, we answer questions about this process every day. Give us a call: 720-598-8300.