Don't Trip Yourself up While Buying a Home
What's better than buying a bunch of new stuff to go in your future home? Nothing. But making large purchases before your loan closes could be trouble. Keep in mind that until closing, your lender is watching you very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy big-ticket items. It may be tempting to order that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Using credit cards to buy furniture could jeopardize your loan process by altering your numbers dramatically. It's even a mistake to make those large purchases with cash. Lenders are examining your available cash when considering your loan.
Don't go on a job search. Lending Institutions look for a consistent job history on your application forms. Finding a new job (especially one with a bigger paycheck) may not jeopardize your ability to qualify for your loan. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't change banks or move money around in your accounts. Your lending institution will require you to produce recent bank statements on your accounts: checking, savings, money market, and other assets. The lender looks for a steady rise and fall of your funds over the month, in the interest of ruling out fraud. Even for innocent reasons, transferring funds or switching banks may make it harder for the lending institution to document your bank history.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") for earnest money. Your earnest money does not belong to the seller: it is actually yours until closing. Your seller might not know that the good faith funds must be applied to your expenses upon closing. It's advisable to put the funds into a trust account, or get an attorney to hold them until the closing of the sale. The disposition of earnest funds, if your transaction falls through, should be indicated in the contract with your seller.
Harbor View Lending* a DBA of Megastar Financial can answer questions about these "Don'ts" and many others. Call us: (207) 571-8034.