Don't Trip Yourself up While Buying a New Home
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With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lending institutions are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't go on a job search. Your recent job history should show consistency. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. But in some cases, getting a new career during the mortgage loan approval process could raise concern and hinder your approval.
Don't take your accounts to a new bank or move around your money. While your lender reviews your loan application, you will likely be required to provide bank statements for the last two or three months on your saving and checking accounts, money market accounts and other liquid assets. To detect potential fraud, most lenders require a detailed paper trail to document the source of all cash. No matter the reason, changing banks or transferring funds might raise a red flag with your lender and slow down your application process.
Don't give cash directly to your seller (commonly in the case of of "for sale by owner") for earnest money. As a rule, your good faith deposit belongs to you, not the seller until closing. Although some FSBO sellers may not know this, any earnest money must go toward the buyer's closing expenses. Get a lawyer or other neutral person who will hang on to the funds or place them in a trust account until you close. The final disposition of good faith funds, if your home purchase fails, should be specified in the purchase agreement with the seller.
Aspen Financial Group, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call: (303) 369-5033.