What to Avoid During a Home Purchase

What's more fun than getting a bunch of new furnishings to go in your future home? Not much. But making large purchases before closing could be trouble. It's best to remember that until closing, your lender is watching your finances very closely. We have listed some actions below you will want to avoid when waiting for closing.

Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Using plastic to buy furniture could jeopardize your loan process by distorting your numbers. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also a bad idea.

Don't get a new career. Lenders feel comfortable seeing a consistent job history on your paperwork. Getting a new job before you start the application process for a mortgage may not affect your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.

Don't move finances around or change banks. Bank statements from recent months for accounts in your name (savings, checking, money market, and other accounts) will probably be analyzed as the lending institution makes decisions regarding your loan application. To avoid fraud, lenders want to see a consistent portrayal of how you earn your living and where additional wealth comes from. No matter the reason, switching banks or transferring funds might raise a red flag with the lender and impede your loan process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your earnest money belongs to you, not the seller up until the sale is final. Your earnest funds are to be used for your expenses upon closing; some FSBO sellers might not realize this. Find an attorney or other neutral person who can hang on to the funds or put them in a trust account until you close. If your home purchase fails, your purchase agreement should specify where the good faith funds should go.

Stepping Stone Mortgage can answer questions about these "Don'ts" and many others. Call us: 5416833300.