What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Until the house is really yours, there still remain some hurdles to jump. We have listed some things below you will want to stay away from when waiting for closing.
Don't buy luxury items. Although you may be planning ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and vehicle purchases until your loan closes. You may send up red flags with your lender if you finance your furniture on your credit cards during your loan process. Using cash to buy big items can also create an issue: most lending institutions consider your available cash when approving your application.
Don't look for a new job. Your recent work history should show consistency. Getting a new job before you start the application process for a mortgage loan may not compromise your approval at all. However, if you switch careers before your loan is approved, your mortgage 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 your accounts (savings, checking, money market, and other accounts) will probably be studied as the lending institution considers your mortgage application. The lender wants to see a steady rise and fall of your funds over the month, in order to rule out fraud. Changing banks or transferring money to another account - for whatever reason - might make it harder for the lender to review your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith money does not belong to the seller: it remains yours until the sale closes. Although your seller might not realize this, the good faith money must be used for your closing expenses. An attorney or other type of neutral party can hold your earnest funds, or you may place them temporarily into a trust account until closing. Your purchase contract should dictate who gets the earnest funds if the transaction fails.
Harbor View Lending* a DBA of Megastar Financial can answer questions about these "Don'ts" and many others. Give us a call at (207) 571-8034.