Things to Avoid While Purchasing a Home

What's better than buying a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before your loan closes can be a mistake. Until the house is really yours, there still remain some hurdles to jump. We have given you a list of actions below we suggest you avoid when waiting for your loan to close.

Don't buy luxury items. Although you will be planning ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and vehicle purchases until the closing of your loan. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase big-ticket items can even create a bad idea: many lending institutions take into consideration your cash reserve when approving your loan.

Don't get a new career. Your recent career history should show stability. Getting a new career before you start the application process for a mortgage loan may not affect your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be slowed down.

Don't take your accounts to a new bank or move around your finances. While your lending institution considers your mortgage loan package, you will probably be asked to submit bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid wealth. Your lender looks for a consistent flow of your money each pay period, in order to rule out fraud. No matter the purpose, changing banks or moving money from one account to another could raise a red flag with your lender and slow your loan process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Some sellers may not know that your good faith funds must go toward your expenses upon 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 closing of the sale. The contract should specify to whom the funds go if the home purchase fails.

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