What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Until closing, there are still some hurdles to jump. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Using cash to buy big items can even create an issue: most lending institutions look at your available cash when approving your loan.
Don't look for a new career. Your recent work history should show stability. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are going to be making more money. But for some, changing jobs during the mortgage approval process could bring concern and hinder your application.
Don't move finances around or switch banks. As your lending institution reviews your loan application, you will likely be instructed to submit bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate fraud, lenders look for clear documentation of how you earn your living and where any additional wealth comes from. No matter the reason, switching banks or moving funds from one account to another may raise a red flag with your lender and slow your loan process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the sale closes. Your earnest funds are to be used for your expenses upon closing; a individual seller might not realize this. It's advisable to put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. The contract should document where the funds go if the transaction fails.
At Foxfield Financial, we answer questions about this process every day. Give us a call: 720-598-8300.