Things to Avoid While Purchasing a Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't throw your money around. You may be itching to order that new couch for the soon-to-be-yours den, but it's best to avoid making large purchases like furniture, appliances, jewelry, or vacations until closing. Financing your 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 a mistake.
Don't get a new career. Lenders feel comfortable seeing a consistent work history on your paperwork. Finding a new career (particularly one with a better salary) may not hinder your ability to qualify for a loan. However, switching jobs in the middle of the application process may affect your approval.
Don't switch your accounts to a new bank or move around your cash. Most lenders will instruct the submission of recent bank statements for accounts in your name: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most lenders want thorough paperwork to determine the source of all funds. No matter the reason, switching banks or moving funds from one account to another may raise a red flag with your lender and slow down your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith deposit does not belong to the seller: it is actually yours until closing. Your earnest funds are to go toward your expenses upon closing; some individual sellers may not realize this. You'll want to put the deposit into a trust account, or get an attorney to hold it until the deal closes. The disposition of earnest money, if your home purchase falls through, should be documented in the purchase agreement with the seller.
At Stepping Stone Mortgage, we answer questions about this process every day. Give us a call: (541) 683-3300.