Money Games

We talk a lot about buying and selling homes and the work it takes to get a mortgage. Once you’ve found the house and entered the escrow period, it should be a cake walk, right? Wrong. Did you know there are financial mis-steps you can make that will upend the entire process right in the middle of everything? Here are things NOT to do when buying a house. 

Moving Money

While working through loan approval, moving any liquid cash from your savings account can trigger red flags to your lender. This is a particular no-no if you’re investing in stocks. There’s logic to this, too. When underwriters look at your savings account and see $100,000, that’s one hundred thousand dollars in liquid cash. However, investing in stocks is only valued at 70% due to fluctuations in the market. So, even if you invested that full $100,000 in stocks, underwriters now only see you as having $70,000 in assets. 

New Lines of Credit

Believe us, when buying a home, lenders go through every aspect of your finances with a fine-tooth comb. This includes what outstanding debts you have and your ability to pay them off. Generally, a mortgage is one of these larger debt items and so what underwriters are doing is making sure that you can afford the monthly payment with your finances as they are today. Applying for new lines of credit during this process is also a no-no. Lenders do not want to see you trying to borrow more money from various companies all at once that you may not be able to repay. 

Going Shopping

Sure, buying a new home prompts something within us to redecorate or splurge on new appliances. However, it’s best to wait until after closing to do this. Lenders sometimes pull financial data mere hours before closing. If you’ve suddenly spent a whole slew of cash or run up more debt, it will affect the debt-to-income ratio that got you approved for the loan in the first place. It’s best to just wait!