What to Avoid During your Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves the loan. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't throw your money around. You may be tempted to buy that new Turkish rug for the soon-to-be-yours den, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or cars until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Using cash to buy big-ticket items can also create an issue: many banks take into consideration your available cash when approving your mortgage.
Don't go on a job search. Your recent work history should show consistency. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. But in some cases, switching jobs during the mortgage loan approval process might bring concern and stymie your application.
Don't take your accounts to a new bank or move around your money. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will be reviewed as the lending institution makes decisions regarding your approval. To detect potential fraud, most lending institutions need a thorough paper trail to verify the source of all incoming funds. No matter the purpose, changing banks or transferring money can raise a red flag with the lender and slow down your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your earnest money does not belong to the seller: it is actually yours until closing. Any earnest funds are to go toward your expenses closing; the FSBO seller may not realize this. An attorney or other type of neutral party can hold onto your deposit, or you may put it temporarily into a trust account until closing. The final disposition of earnest money, if your transaction falls through, should be specified in the purchase agreement with your seller.
At Harbor View Lending* a DBA of Megastar Financial, we answer questions about this process every day. Give us a call at (207) 571-8034.