Don't Trip Yourself up While Buying your New Home

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before your loan closes. Here are some actions to refrain from before closing to be sure the transaction goes well.

Don't buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Your lender may send up red flags if you buy your electronics on your credit cards in the middle of your loan process. Using cash to buy expensive items can even be an issue: many lenders take into consideration your cash on hand when approving your loan.

Don't look for a new career. Consistency in your job history is a positive thing to lending institutions. Finding a new career (particularly one with a better salary) may not affect your ability to qualify for your mortgage. However, if you switch careers before approval, your process could fail or be bogged down.

Don't change banks or move cash around in your accounts. Bank statements from the last few months for all of your accounts (savings, checking, money market, and other accounts) will probably be reviewed as the lender makes decisions regarding your mortgage application. To avoid fraud, lenders require a clear and consistent picture of how you earn your money and where any additional wealth comes from. No matter the reason, moving banks or moving money from one account to another may raise a red flag with your lender and slow your qualification process.

Don't give money directly to your seller (usually in cases of "for sale by owner") to be considered earnest money. As a rule, your good faith deposit is yours, not the seller's up until closing. Some FSBO sellers might not realize that the good faith funds must go toward your expenses upon closing. An attorney or other type of neutral party can hold onto your deposit, or you may put it temporarily into a trust account until you close. Your contract should specify where the deposit goes if the transaction falls through.

Harbor View Lending* a DBA of Megastar Financial can answer questions about these "Don'ts" and many others. Call us: (207) 571-8034.