Things to avoid before buying a home or refinancing

Many new homebuyers, even seasoned homeowners, make a huge mistake.  The moment their offer on a home is accepted, or the lender has approved their loan, these unwary buyers rush out to buy things for their new home.

But there are still a few hurdles to surmount before the keys are yours. Here are some things to avoid to assure your transaction goes smoothly:

• Don't make expensive purchases.  It is a temptation to order that new sofa for your soon-to-be new living room - don't do it.  It's best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing.  Financing furniture, for example, can easily jeopardize your credit worthiness at a most critical time.  This behavior, whether on store credit or your own credit card will change your DTI - debt-to-income ratio - and possibly turn a loan approval into denial.  Likewise, using cash to purchase big ticket items creates a problem because most loan programs count cash as reserves when approving your mortgage.  And reserves play a critical role in lender approval of your financing.  Always consult your mortgage planner prior to either of these very risky actions is taken.  Besides, what if for whatever reason your agreement to purchase a particular home falls through???  Now you've got new furniture, whatever, for a house you can't or won't be purchasing.
• Don't change jobs. With some notable exceptions, lenders demand consistent job history.  Generally, changing jobs will not affect your ability to qualify for a mortgage loan - especially if you are going to be making more money.  But in some cases, shifting jobs during the loan approval process raise very real lender concerns and affect your application adversely.  Consult with your trusted mortgage professional before making any life changing shifts in employment.
• Don't switch banks or move money around.  As your lender reviews your loan application, you'll probably be asked to provide complete bank statements for the last two or three months for your checking and saving accounts, money market funds and other liquid assets.  To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds.  Changing banks or transferring money to another account - even if its just to consolidate funds - generally complicates the lender's ability to confirm funds.  Behavior of this type rightfully raises suspicions and elongates the lending process.
• NEVER, EVER give a good faith deposit directly to the seller in a FSBO purchase. Your good faith deposit (earnest money) belongs to you, not to the seller, until the deal closes.  Your For Sale By Owner seller may not know that your good faith funds should be applied to your expenses at closing.  The Sam Croskell TEAM will advise how best to put your monies in safe keeping - generally an escrow account with a trusted title and escrow company.  Your purchase contract should dictate to whom the funds go should the transaction fall through for cause or not.  Again, we can recommend a trusted, experienced, bonded and insured company to perform this function for you.
• Don't disregard your lenders requirements.  You may have been pre-approved but your work with the lender is still a ways from being finished.  To consummate your financing you will need to meet certain requirements.  Your lender will need copies of your bank statements, W-2s and other paperwork.  It is up to you to supply these required items in timely fashion. Failure to submit qualifying documents will most certainly delay your loan and could cause the loss of an approval loan and the financing you need to buy your home.
• Pay attention - we don't do this to be difficult.  The members of the Sam Croskell TEAM work hard to make certain your financing is the best possible for your particular circumstances.  We don't ask for documentation to be difficult - our goal is to remove all potential obstacles from your loan funding as you'd like.  We simply don't ask for supporting documentation unless the lender's underwriter will need it to finalize your loan quickly and accurately.