What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. It's wise to remember that until closing, your lender is watching you very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't throw your money around. It may be tempting to order that new sofa for the soon-to-be-yours parlor, but it's best to stay away from making large buys like furniture, appliances, jewelry, or cars until closing. You may send up red flags with your lender if you finance new appliances on your credit cards in the middle of your loan process. It's even a red flag to make those big-ticket purchases using cash. Lending Institutions are examining your available cash when considering your loan.
Don't look for a new job. Your recent work history should show consistency. Getting a new career before you apply 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 stalled.
Don't move finances around or change banks. As the lender considers your mortgage loan application, you will likely be asked to submit bank statements for recent months for your saving and checking accounts, money market funds and other liquid wealth. To eliminate potential fraud, most lending institutions need a detailed paper trail to verify the source of all cash. No matter the purpose, switching banks or transferring money might raise a red flag with the lender and slow down your qualification process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until the sale is complete, any good faith deposit remains yours. Your seller may not realize that these good faith funds should be used for your expenses at closing. An attorney or other type of neutral party can hold your earnest funds, or you may place them temporarily into a trust account until you close. Your purchase agreement should specify who gets the money 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.