Don't Trip Yourself up While Buying a Home
What's more fun than buying a bunch of new furnishings to go in your future home? Not much. But making large purchases before your loan closes could be trouble. There still remain a few major hurdles to jump before closing. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Since lending institutions are perusing your bank accounts, a large cash purchase is also a bad idea.
Don't go on a career search. Your recent career history should show stability. Getting a new job before you start the application process for a mortgage may not affect your approval at all. However, if you switch careers before approval, your process could fail or be stalled.
Don't move money around or switch banks. While the lending institution considers your mortgage package, you will likely be asked to produce bank statements for the last few months on your checking accounts, savings accounts, money market accounts and other liquid assets. To eliminate potential fraud, most loans want a detailed paper trail to document the source of all funds. Switching banks or moving finances to another account - for whatever reason - might make it difficult for the lender to review your funds.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") to be used as earnest money. Your good faith money does not belong to the seller: it remains yours until the sale closes. Your earnest money is to be used for your expenses upon closing; some sellers may not understand this. We recommend that you put the money into a trust account, or get an attorney to hold it until the deal closes. The disposition of good faith money, if your home purchase fails, should be indicated in the purchase agreement with your seller.
Foxfield Financial can walk you through the pitfalls of getting a mortgage. Give us a call: 720-598-8300.