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 furniture store. Until the keys are handed over, there are still some hoops to jump through. 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 buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's also a mistake to make those big purchases with cash. Lenders are looking at your cash reserve when considering your loan.

Don't get a new career. Your recent job history should show stability. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, if you switch careers before approval, your loan process could fail or be bogged down.

Don't move finances around or switch banks. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other accounts) will likely be reviewed as the lender considers your loan application. To avoid fraud, lenders want to see a clear and consistent picture of how you earn your money and where any additional wealth comes from. Changing banks or moving finances to another account - no matter the purpose - might make it harder for your lender to document your funds.

Don't give cash directly to your seller (usually in cases of "for sale by owner") for earnest money. Until closing, any good faith money actually belongs to you. Any good faith money is to go toward your expenses closing; your individual seller might not know this. A neutral party, like an attorney can hang onto your earnest funds, or you may put them temporarily into a trust account until closing. The final disposition of good faith funds, if your home purchase fails, should be written in the contract with your seller.

At Harbor View Lending* a DBA of Megastar Financial, we answer questions about this process every day. Call us: (207) 571-8034.