Things to Avoid While Purchasing a Home
What's more fun than getting a bunch of new furniture to adorn your future home? Nothing. But making large purchases before your loan closes could be trouble. Until closing, there are still some hurdles to jump. Here are some things to refrain from before closing to assure your transaction goes well.
Don't empty your wallet on big-ticket items Although you may be listing ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and car purchases until your loan closes. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Because lenders are perusing your bank accounts, a large cash purchase is also a bad idea.
Don't go on a career search. Your recent job history should show stability. Finding a new job (particularly one with a bigger salary) may not hinder your ability to qualify for your mortgage. However, getting a new career during your approval process might influence your approval.
Don't take your accounts to a new bank or move around your finances. Bank statements from the last two or three months for your accounts (checking, savings, money market, and others) will be analyzed as the lending institution considers your application. Your lending institution is looking for a steady flow of your money over the pay period, in the interest of avoiding fraud. Even for practical reasons, transferring money or switching banks could make it more difficult for your lender to document your bank history.
Don't hand over earnest money 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 closing. Any good faith funds are to be used for your expenses closing; some sellers may not understand this. Get an attorney or other neutral person who can hold the funds or place them in a trust account until closing. The disposition of earnest funds, in the case of a failed transaction, should be specified in the contract with your seller.
Foxfield Financial can walk you through the pitfalls of getting a mortgage. Give us a call at 720-598-8300.