Things to Avoid While Purchasing a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Until your keys are in hand, there are still some hurdles to jump. 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 order that new Turkish rug for the soon-to-be-yours den, but it's best to avoid making major buys like furniture, appliances, jewelry, or cars until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also a mistake.

Don't go on a job search. Lending Institutions feel comfortable seeing a consistent career history on your application forms. Finding a new career (particularly one with a bigger paycheck) may not jeopardize your ability to qualify for a mortgage. But in some cases, switching jobs during the mortgage loan application process could raise concern and affect your approval.

Don't take your accounts to a new bank or move around your money. Your lending institution will ask for recent bank statements for accounts in your name: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most lenders need thorough paperwork to document the source of all funds. Even for practical purposes, moving around finances or changing banks could make it harder for your lender to confirm your bank history.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith money does not belong to the seller: it is actually yours until closing. The earnest money is to go toward your expenses upon closing; some sellers may not know this. Get a lawyer or other neutral person who will hang on to the funds or place them in a trust account until closing. If your sale falls through, your purchase contract should specify where your good faith deposit should go.

At Stepping Stone Mortgage, we answer questions about this process every day. Call us at 5416833300.