Don't Trip Yourself up While Buying a New Home

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. It's best to remember that until closing, your lender is watching you very closely. Here are some actions to avoid before closing to assure the transaction goes well.

Don't throw your money around. Although you may be listing ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until the closing of your loan. Your credit numbers could change suddenly if you purchase new furniture using credit cards. It's even a mistake to make those large purchases with cash. Lenders are looking at your cash reserve when considering your loan.

Don't get a new job. Your recent job history should show stability. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are improving your salary. However, switching careers during your approval process might affect whether or not you are approved.

Don't move finances around or switch banks. As your lending institution considers your loan application, you will likely be asked to produce bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid finances. To detect potential fraud, most loans need detailed paperwork to verify the source of all funds. Even for innocent purposes, transferring cash or changing banks may make it harder for the lending institution to document your account history.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Although your FSBO seller might not understand this, your earnest money must be applied to your closing expenses. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until you close. The final disposition of earnest funds, if your transaction fails, should be included in the purchase agreement with the seller.

Foxfield Financial can walk you through the pitfalls of getting a mortgage. Give us a call at 720-598-8300.

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