Don't Trip Yourself up While Buying a Home

Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the loan is approved. It's best to remember that until closing, your lender is watching your accounts very closely. Here are some actions to avoid before closing to be sure your transaction goes smoothly.

Don't buy big-ticket items. Although you may be dreaming of ways to turn your new home into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.

Don't look for a new job. Consistency in your career history is a positive thing to lenders. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, if you switch careers before approval, your loan process could fail or be bogged down.

Don't take your accounts to a new bank or move around your cash. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will likely be reviewed as the lender makes decisions regarding your loan application. The lending institution hopes to see a steady flow of your funds over the pay period, in the interest of avoiding fraud. No matter the reason, switching banks or transferring money may raise a red flag with your lender and slow your qualification process.

Don't give funds directly to your seller (usually in cases of "for sale by owner") for a "good faith" deposit. Until the sale is complete, any good faith money actually belongs to you. Any earnest funds are to be applied to your expenses upon closing; some sellers might not know this. Find an attorney or other neutral party who is able to hold the funds or put them in a trust account until closing. The disposition of good faith money, in the case of a failed transaction, should be indicated in the contract with your seller.

Stepping Stone Mortgage can answer questions about these "Don'ts" and many others. Give us a call: (541) 683-3300.

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