What to Avoid During a Home Purchase
What's more fun than getting a bunch of new stuff to go in your future home? Not much. But making big ticket purchases before your loan closes can be a mistake. Until your keys are in hand, there are still some hoops to jump through. Here are some things to stay clear of during the home buying process to assure the transaction goes well.
Don't buy luxury items. Although you may be listing ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until your loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. Because lending institutions are perusing your financial accounts, a large cash purchase is also a bad idea.
Don't look for a new career. Consistency in your career history is a good thing to lenders. Getting a new job may not compromise your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. But in some cases, switching jobs during the mortgage application process may raise concern and stymie your approval.
Don't move money around or change banks. As the lending institution considers your loan application, you will likely be instructed to provide bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid wealth. In order to avoid fraud, lenders look for a consistent portrayal of how you earn your money and where additional funds come from. No matter the reason, changing banks or transferring funds could raise a red flag with your lender and impede your qualification process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until the sale is complete, the good faith deposit remains yours. The good faith money is to go toward your expenses upon closing; some individual sellers might not know this. Find a lawyer or other neutral person who can hang on to the funds or put them in a trust account until you close. The disposition of earnest money, in the case of a failed transaction, should be written in the contract with your seller.
Harbor View Lending* a DBA of Megastar Financial can walk you through the pitfalls of getting a mortgage. Call us at (207) 571-8034.