What to Avoid During your Home Purchase
What's better than buying a bunch of new furniture to go in your future home? Nothing. But making large purchases before closing can be an error. Until your keys are in hand, there are still some hoops to jump through. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Because lending institutions are examining your bank accounts, a large cash purchase is also a bad idea.
Don't go on a career search. Lenders look for a consistent work history on your application forms. Changing jobs may not compromise your ability to qualify for a mortgage loan - especially if you are improving your salary. But for some, switching jobs during the mortgage approval process could raise concerns and hinder your approval.
Don't take your accounts to a new bank or move around your cash. While your lender reviews your loan package, you will probably be asked to submit bank statements for recent months on your saving and checking accounts, money market funds, and other liquid finances. Your lending institution looks for a steady flow of your funds over the month, in order to rule out fraud. Changing banks or moving money elsewhere - no matter the reason - may hinder the documentation of your funds.
Don't give cash directly to your seller (commonly in the case of "for sale by owner") to be considered a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until closing. Your earnest funds are to go toward your expenses upon closing; the individual seller might not realize this. A neutral party, like an attorney, can hold onto your earnest funds, or you may place them temporarily into a trust account until closing. The disposition of good faith money, if your home purchase fails, should be specified in the contract with your seller.
Stepping Stone Mortgage can answer questions about these "Don'ts" and many others. Give us a call: (541) 683-3300.