Things to Avoid While Buying a Home
What's more fun than buying a bunch of new furniture to adorn your future home? Nothing. But making big purchases before your loan closes could be trouble. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some things to stay clear of during the home buying process to assure the transaction goes smoothly.
Don't make expensive purchases. Although you may be dreaming of ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you purchase your electronics on your credit cards during your loan process. Because lenders are examining your bank accounts, a large cash purchase is also not advised.
Don't get a new career. Your recent job history should show stability. Getting a new job before you start the application process for a loan may not affect your approval at all. However, switching jobs during the approval process might influence your approval.
Don't switch your accounts to a new bank or move around your money. Your lender will require you to provide recent bank statements of your accounts: savings, checking, money market, and other assets. The lender is looking for a consistent rise and fall of your funds each pay period, in the interest of avoiding fraud. Even for practical purposes, transferring finances or switching banks might make it more difficult for the lending institution to verify your account history.
Don't give funds directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. Until closing, the good faith deposit remains yours. The good faith funds are to be used for your expenses upon closing; some FSBO sellers might not realize this. It's wise to put the money into a trust account, or get an attorney to hold it until closing. If your transaction fails, your purchase agreement should specify where this earnest money should go.
Stepping Stone Mortgage can answer questions about these "Don'ts" and many others. Give us a call at (541) 683-3300.