Things to Avoid While Buying a Home
What's better than buying a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Until closing, there are still some hoops to jump through. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items You may be itching to order that new sofa for the soon-to-be-yours parlor, but it's best to avoid making big ticket purchases like furniture, appliances, electronic equipment, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Since lenders are reviewing your financial accounts, a large cash purchase is also a bad idea.
Don't get a new job. Lending Institutions like to see a consistent work history on your application forms. Getting a new job before you apply for a loan may not compromise your approval at all. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't change banks or move cash around in your bank accounts. Bank statements from recent months for your accounts (savings, checking, money market, and other accounts) will likely be reviewed as the lending institution considers your mortgage application. To eliminate potential fraud, most lending institutions need detailed paperwork to determine the source of all funds. No matter the purpose, changing banks or moving funds from one account to another might raise a red flag with your lender and slow your approval process.
Don't deliver 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 the sale closes. Any good faith funds are to go toward your expenses closing; some individual sellers might not understand this. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. Your contract should specify where the funds go if the home purchase does not go through.
Foxfield Financial can answer questions about these "Don'ts" and many others. Call us at 720-598-8300.