What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before your loan closes. Here are some things to stay clear of before closing to assure the transaction goes well.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Using plastic to buy new living room furniture could compromise your lending process by distorting your numbers. It's also a red flag to make those big-ticket purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't look for a new career. Consistency in your work history is a positive thing to lending institutions. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are getting a better salary. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't move finances around or change banks. Bank statements from the last few months for all of your accounts (savings, checking, money market, and other assets) will be studied as the lender considers your application. To detect fraud, lenders want to see a clear and consistent picture of how you earn your money and where any additional money comes from. No matter the purpose, switching banks or moving money from one account to another might raise a red flag with your lender and slow down your qualification process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until closing. Your seller may not know that your good faith money must go toward your expenses at closing. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the deal closes. Should your home purchase fail, your purchase agreement should document where this good faith funds should go.
Harbor View Lending* a DBA of Megastar Financial can answer questions about these "Don'ts" and many others. Give us a call: (207) 571-8034.