Things to Avoid While Buying a Home
Many 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 loan is approved. Until the house is really yours, there are still some hurdles to jump. We have given you a list of things below we suggest you stay away from when waiting for closing.
Don't buy luxury items. Although you may be dreaming of ways to turn your new home into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Using credit cards to buy new living room furniture could compromise your lending process by distorting your numbers. Using cash to purchase big items can even create a bad idea: most lenders take into consideration your cash reserve when approving your mortgage.
Don't get a new job. Your recent job history should show stability. Getting a new career before you apply for a loan may not jeopardize your approval at all. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. Bank statements from recent months for all of your accounts (savings, checking, money market, and other assets) will likely be reviewed as the lending institution makes decisions regarding your approval. To avoid potential fraud, most lending institutions need thorough paperwork to verify the source of all cash. Even for innocent reasons, moving around cash or switching banks might make it difficult for the lender to document your bank history.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") for earnest money. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Although your FSBO seller may not realize this, any good faith funds should be applied to your closing expenses. Get an attorney or other neutral person who can hold the funds or place them in a trust account until you close. If your transaction fails, your purchase contract should specify where the 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.