Things to Avoid While Purchasing a New Home

Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. 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. Although you will be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Because lenders are looking closely at your bank accounts, a large cash purchase is also a bad idea.

Don't look for a new career. Lending Institutions like to see a consistent career history on your application. Getting a new job before you start the application process for a mortgage loan may not get in the way of your approval at all. But for some people, switching jobs during the mortgage approval process might raise concern and hinder your application.

Don't move cash around or switch banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will probably be analyzed as the lending institution makes decisions regarding your loan application. To eliminate potential fraud, most lenders require thorough paperwork to determine the source of all incoming funds. No matter the reason, moving banks or transferring funds could raise a red flag with your lender and slow down your application process.

Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not to the seller until the sale is final. Although some individual sellers may not know this, your earnest money should be applied to the buyer's closing expenses. We recommend that you put the money into a trust account, or get an attorney to hold it until the deal closes. The disposition of earnest money, in the case of a failed transaction, should be written in the purchase agreement with the seller.

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.