What to Avoid During your Home Purchase
What's more fun than getting a bunch of new furniture to adorn your future home? Not much. But making big ticket purchases before your loan closes can be a misstep. It's best to remember that until closing, your lender is watching your accounts very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't make expensive purchases. It may be tempting to buy that new easy-chair for the soon-to-be-yours parlor, but it's best to avoid making major purchases like furniture, appliances, electronic equipment, or cars until closing. You may send up red flags with your lender if you purchase your furniture on your credit cards during your loan process. Because lending institutions are perusing your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Stability in your job history is a positive thing to lending institutions. Getting a new career before you apply for a mortgage may not compromise your approval at all. But for some people, changing jobs during the mortgage approval process could raise concern and hinder 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 your accounts: checking, savings, money market, and other assets. To eliminate potential fraud, most lending institutions require a detailed paper trail to verify the source of all funds. Even for practical purposes, transferring funds or switching banks might make it difficult for your lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. As a rule, your good faith money is yours, not the seller's until closing. Any good faith money is to be used for your expenses closing; some sellers might not realize this. Get a lawyer or other neutral person who can hang on to the funds or place them in a trust account until you close. The final disposition of good faith money, in the case of a failed transaction, should be specified in the contract with your seller.
Stepping Stone Mortgage can answer questions about these "Don'ts" and many others. Call us at (541) 683-3300.