Things to Avoid While Purchasing a Home

What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But making large purchases before your loan closes could be trouble. There are still a few major hurdles to jump before your loan closes. Here are some things to stay clear of during the home buying process to assure your transaction goes well.

Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Using plastic to buy furniture could jeopardize your lending process by altering your numbers dramatically. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.

Don't get a new job. Your recent work history should show stability. Finding a new job (particularly one with a better salary) may not hinder your ability to qualify for your mortgage. But for some, changing jobs during the mortgage approval process may bring concern and stymie your approval.

Don't change banks or move money around in your accounts. Most lenders will ask for recent bank statements on accounts in your name: checking, savings, money market, and other assets. To avoid fraud, lenders need a clear and consistent picture of how you earn your money and where additional funds come from. Even for innocent purposes, moving around funds or switching banks could make it harder for the lending institution to confirm your bank history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith deposit does not belong to the seller: it is actually yours until closing. Although some FSBO sellers might not know this, the good faith funds should be used for the buyer's closing expenses. You'll want to put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the closing of the sale. Your purchase agreement should indicate who gets the money if the transaction does not go through.

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