Don't Trip Yourself up While Buying your Home
What's better than buying a bunch of new stuff to adorn your future home? Nothing. But making big ticket purchases before your loan closes can be a misstep. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy luxury 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 big purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you buy your furniture on your credit cards in the middle of your loan process. It's even a mistake to make those large purchases using cash. Lenders are looking at your available cash when considering your loan.
Don't get a new career. Your recent job history should show consistency. Finding a new job (especially one with a bigger salary) may not hinder your ability to qualify for your loan. But in some cases, changing jobs during the mortgage loan application process might raise concern and hinder your approval.
Don't switch banks or move cash around in your accounts. Most lenders will ask for recent bank statements for accounts in your name: checking, savings, money market, and other liquid assets. To avoid potential fraud, most loans require a detailed paper trail to document the source of all cash. Even for innocent purposes, transferring funds or switching banks could make it more difficult for your lender to verify your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until the sale is complete, the earnest money actually belongs to you. The FSBO seller may not realize that your good faith funds should be applied to your expenses upon closing. An attorney or other type of neutral party can hang onto your funds, or you may put them temporarily into a trust account until closing. The contract should specify to whom the money goes if the transaction does not go through.
At Harbor View Lending* a DBA of Megastar Financial, we answer questions about this process every day. Call us: (207) 571-8034.