Things to Avoid While Buying a Home
What's better than buying a bunch of new furniture to go in your future home? Nothing. But making big ticket purchases before closing could be trouble. It's best to remember that until you get the keys, your lender is watching your accounts very closely. We have given you a list of actions below we suggest you avoid when waiting for your loan to close.
Don't throw your money around. Although you may be dreaming of ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until the closing of your loan. Using credit cards to buy new living room furniture could compromise your lending process by distorting your numbers. It's also a bad idea to make those big-ticket purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't look for a new job. Lenders feel comfortable seeing a consistent career history on your application forms. Getting a new career before you start the application process for a mortgage may not compromise your approval at all. However, switching jobs in the middle of the application process could influence whether or not you are approved.
Don't move finances around or change banks. Bank statements from recent months for your accounts (savings, checking, money market, and other assets) will probably be analyzed as the lender considers your approval. In order to avoid fraud, lenders want to see a consistent portrayal of how you earn your living and where any additional wealth comes from. No matter the reason, switching banks or moving money from one account to another can raise a red flag with your lender and slow your loan process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit remains yours. Although your seller may not realize this, any good faith money must go toward your closing expenses. Find an attorney or other neutral party who can hang on to the funds or put them in a trust account until you close. The final disposition of earnest funds, in the case of a failed transaction, should be specified 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: (207) 571-8034.