What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves the loan. Until your keys are in hand, there still remain some hoops to jump through. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't throw your money around. It may be tempting to order that new easy-chair for the soon-to-be-yours living room, but it's advisable to avoid making large purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's also a red flag to make those big-ticket purchases using cash. Lenders are looking at your available cash when considering your loan.
Don't go on a career search. Your recent job history should show consistency. Getting a new career before you start the application process for a mortgage may not compromise your approval at all. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't switch banks or move cash around in your accounts. As your lender reviews your mortgage package, you will probably be required to provide bank statements for the last few months on your saving and checking accounts, money market accounts and other liquid finances. To detect fraud, lenders need a consistent portrayal of how you earn your money and where additional wealth comes from. Changing banks or transferring funds to another account - even if its merely to consolidate funds - may hinder the review of your accounts.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Any good faith money is to go toward your expenses closing; some individual sellers might not realize this. We recommend that you put the money into a trust account, or get an attorney to hold it until the deal closes. If your home purchase fails, your contract with the seller should specify where your good faith funds should go.
Harbor View Lending* a DBA of Megastar Financial can answer questions about these "Don'ts" and many others. Give us a call at (207) 571-8034.