Things to Avoid While Purchasing a Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. There are still a few major hurdles to jump before closing. We have given you a list of things below we suggest you stay away from when waiting for your loan to close.
Don't buy luxury items. Although you will be listing ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until your loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy big-ticket items can also be a bad idea: most lenders look at your cash reserve when approving your loan.
Don't go on a job search. Lenders like to see a consistent job history on your application. Getting a new job before you apply for a mortgage may not jeopardize your approval at all. But in some cases, changing jobs during the mortgage approval process could raise concern and hinder your application.
Don't move money around or change banks. Most lenders will instruct the submission of recent bank statements for accounts in your name: savings, checking, money market, and other assets. Your lender needs to see a consistent rise and fall of your funds each month, in the interest of avoiding fraud. Even for innocent reasons, transferring money or switching banks may make it more difficult for your lending institution to document your account history.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be used as earnest money. Your good faith deposit does not belong to the seller: it remains yours until closing. The good faith money is to be applied to your expenses upon closing; some FSBO sellers may not know this. It's wise to put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. The disposition of earnest money, in the case of a failed transaction, should be specified in the contract with your seller.
At Stepping Stone Mortgage, we answer questions about this process every day. Give us a call at (541) 683-3300.