What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves their loan. Until your keys are in hand, there still remain some hoops to jump through. Here are some actions to stay clear of before closing to assure your transaction goes well.

Don't buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy new living room furniture could compromise your loan process by distorting your numbers. It's even a red flag to make those large purchases using cash. Lending Institutions are examining your cash reserve when considering your loan.

Don't get a new career. Lending Institutions feel comfortable seeing a consistent job history on your paperwork. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, switching jobs during the loan process might affect your approval.

Don't switch your accounts to a new bank or move around your cash. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other accounts) will be studied as the lender makes decisions regarding your application. The lender is looking for a steady rise and fall of your money each pay period, in order to avoid fraud. Even for innocent reasons, transferring funds or changing banks might make it more difficult for your lender to verify your bank history.

Don't give money directly to your seller (commonly in cases of "for sale by owner") for a "good faith" deposit. Your earnest money does not belong to the seller: it is actually yours until the transaction is final. Any good faith funds are to be applied to your expenses closing; some sellers might not realize this. 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 contract should indicate who keeps the deposit if the transaction does not go through.

Foxfield Financial can answer questions about these "Don'ts" and many others. Call us: 720-598-8300.

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