Don't Trip Yourself up While Buying your New Home
Shopping for a mortgage? We will be glad to assist you! Give us a call at 303-477-3889. Ready to get started? Apply Now
What's more fun than buying a bunch of new furnishings to go in your new home? Nothing. However, purchasing big-ticket items prior to your loan closes can be a misstep. Until the keys are handed over, there are still some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to order that new couch for the soon-to-be-yours family room, but it's advisable to avoid making major buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. It's even a red flag to make those large purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't go job hunting. Lending Institutions feel comfortable seeing a consistent career history on your application forms. Getting a new job before you start the application process for a loan may not compromise your approval at all. However, if you switch careers before approval, your process could fail or be bogged down.
Don't move cash around or switch banks. While the lender reviews your mortgage application, you will likely be instructed to provide bank statements for recent months for your saving and checking accounts, money market accounts and other liquid assets. To avoid potential fraud, most loans require a detailed paper trail to determine the source of all funds. No matter the reason, moving banks or transferring funds may raise a red flag with your lender and impede your application process.
Don't give money directly to your seller (generally in the case of of "for sale by owner") to be considered a "good faith" deposit. Until the completion of the deal, the good faith deposit remains yours. Although your FSBO seller might not know this, any good faith funds should go toward the buyer's closing expenses. Find a lawyer or other neutral person who will hold the deposit or place it in a trust account until you close. The final disposition of earnest funds, if your transaction fails, should be indicated in the purchase agreement with the seller.
At Colorado Lending Team, we answer questions about this process every day. Give us a call: 303-477-3889.