Don't Trip Yourself up While Buying a New Home

What's more fun than getting a bunch of new furnishings to adorn your future home? Not much. But making big purchases before your loan closes can be a misstep. There still remain a few major hurdles to jump before the house is realy yours. Here are some things to stay clear of during the home buying process to be sure the transaction goes well.

Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Because lenders are looking closely at your financial accounts, a large cash purchase is also a bad idea.

Don't look for a new job. Lending Institutions look for a consistent work history on your paperwork. Getting a new job before you start the application process for a loan may not affect your approval at all. But for some people, changing careers during the mortgage application process could raise concern and hinder your application.

Don't take your accounts to a new bank or move around your cash. Bank statements from the last two or three months for your accounts (savings, checking, money market, and other accounts) will probably be reviewed as the lender considers your loan application. In order to eliminate fraud, lenders look for a clear and consistent picture of how you earn your living and where additional funds come from. Even for innocent purposes, moving around funds or switching banks may make it difficult for the lender to document your account history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your earnest money does not belong to the seller: it is actually yours until closing. Any good faith money is to be used for your expenses closing; some sellers may not realize this. You'll need to put the money into a trust account, or get a neutral party, like an attorney, to hold it until closing. The disposition of good faith funds, in the case of a failed transaction, should be documented in the contract with the seller.

Stepping Stone Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (541) 683-3300.

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