Don't Trip Yourself up While Buying a New Home
What's better than buying a bunch of new stuff to go in your future home? Nothing. But making big ticket purchases before your loan closes can be a misstep. Keep in mind that until closing, your lender is watching you very closely. We have given you a list of actions below you will want to stay away from when waiting for your loan to close.
Don't overspend on big-ticket items You may be itching to buy that new Turkish rug for the soon-to-be-your parlor, but it's advisable to avoid making large buys like furniture, appliances, electronic equipment, or vacations until closing. Your lender may send up red flags if you buy new appliances on your credit cards in the middle of your loan process. Using cash to purchase big items can even be a mistake: most lending institutions look at your available cash when approving your mortgage.
Don't go on a career search. Stability in your work history is a positive thing to lending institutions. Getting a new career before you apply for a loan may not compromise your approval at all. However, finding a new job in the middle of your loan process may affect whether or not you are approved.
Don't switch banks or move money around in your bank accounts. Your lending institution will ask for recent bank statements of all of your accounts: savings, checking, money market, and other liquid assets. The lending institution looks for a steady flow of your money over the month, in the interest of ruling out fraud. No matter the reason, switching banks or transferring funds can raise a red flag with your lender and slow down your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until the completion of the deal, any good faith money remains yours. Some sellers might not know that any earnest money must be applied to your expenses at closing. A neutral party, like an attorney can hang onto your earnest funds, or you may place them temporarily into a trust account until you close. Should your home purchase fail, the contract with the seller should dictate where the good faith deposit should go.
At Stepping Stone Mortgage, we answer questions about this process every day. Give us a call at (541) 683-3300.