Things to Avoid While Purchasing a Home
With the thrill 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 appliance store. Until closing, there still remain some hurdles to jump. Here are some things to avoid before closing to be sure the transaction goes smoothly.
Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you purchase your furniture on your credit cards in the middle of your loan process. Using cash to purchase expensive items can also be a problem: most lending institutions look at your available cash when approving your mortgage loan.
Don't look for a new career. Your recent job history should show consistency. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. But in some cases, changing careers during the loan application process might raise concern and hinder your application.
Don't take your accounts to a new bank or move around your finances. While your lender reviews your loan package, you will likely be asked to provide bank statements for the last few months for your checking accounts, savings accounts, money market accounts and other liquid assets. To avoid potential fraud, most loans need thorough paperwork to verify the source of all funds. No matter the reason, changing banks or moving funds from one account to another may raise a red flag with the lender and slow down your application process.
Don't give money directly to your seller (generally in the case of of "for sale by owner") for earnest money. As a rule, your good faith money is yours, not the seller's up until the sale is final. Although some individual sellers may not know this, any good faith money should be applied to the buyer's closing expenses. An attorney or other type of neutral party can hold onto your funds, or you may put them temporarily into a trust account until you close. The purchase contract should dictate who keeps the deposit if the transaction falls through.
At Foxfield Financial, we answer questions about this process every day. Call us at 720-598-8300.