What to Avoid During a Home Purchase

What's more fun than buying a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before closing can be harmful. There are still a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

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 keep away from major purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a mistake to make those big-ticket purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.

Don't get a new career. Consistency in your work history is a positive thing to lenders. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are going to be making more money. But for some people, changing careers during the mortgage application process might raise concern and stymie your approval.

Don't switch banks or move money around in your accounts. Bank statements from the last two or three months for your accounts (savings, checking, money market, and others) will likely be reviewed as the lender considers your mortgage application. To avoid fraud, lenders will need clear documentation of how you earn your money and where additional funds come from. Switching banks or moving money elsewhere - no matter the purpose - may make it harder for the lender to document your funds.

Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. As a rule, your earnest money is yours, not the seller's up until the deal closes. Some FSBO sellers might not realize that the good faith funds must be applied to your expenses upon closing. Get a lawyer or other neutral person who will hang on to the deposit or put it in a trust account until closing. The disposition of good faith money, if your home purchase falls through, should be specified in the purchase agreement with the seller.

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