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? Not much. But buying big ticket items before your loan closes could be trouble. There still remain a few major hurdles to jump before closing. Below you'll find a list of things to avoid during this crucial time of your home purchase.

Don't overspend on 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 keep away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. You may send up red flags with your lender if you purchase your furniture on your credit cards during your loan process. Because lending institutions are reviewing your bank accounts, a large cash purchase is also not advised.

Don't look for a new job. Lending Institutions feel comfortable seeing a consistent job history on your paperwork. Getting a new job before you apply for a mortgage may not jeopardize your approval at all. However, if you switch careers before you qualify, your loan process could fail or be stalled.

Don't move money around or change banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will probably be reviewed as the lending institution considers your approval. To detect potential fraud, most loans need thorough paperwork to document the source of all incoming funds. Changing banks or moving finances to another account - even if its just to consolidate funds - might hinder the documentation of your funds.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith money belongs to you, not to the seller until the deal closes. Any good faith funds are to go toward your expenses upon closing; some sellers may not realize this. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until closing. Your purchase agreement should indicate to whom the funds go if the transaction fails.

At Harbor View Lending* a DBA of Megastar Financial, we answer questions about this process every day. Call us at (207) 571-8034.