Don't Trip Yourself up While Buying your Home
What's better than getting a bunch of new furniture to go in your future home? Nothing. But making large purchases before closing could be trouble. Until closing, there still remain some hurdles to jump. We have listed some things below we suggest you avoid when waiting for closing.
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 major purchases like furniture, jewelry, appliances, or vacations until closing. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to buy big items can even create an issue: most lenders look at your available cash when approving your application.
Don't go on a job search. Consistency in your work history is a good thing to banks and other lenders. Finding a new job (especially one with a bigger salary) may not affect your ability to qualify for a mortgage. However, switching jobs in the middle of your application process may influence your approval.
Don't move cash around or switch banks. Your lender will instruct the submission of recent bank statements for your accounts: savings, checking, money market, and other liquid assets. Your lender needs to see a steady rise and fall of your funds each month, in order to avoid fraud. Switching banks or transferring finances elsewhere - no matter the purpose - might hinder the documentation of your accounts.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. A FSBO seller may not know that these good faith funds must go toward your expenses upon closing. Get a lawyer or other neutral person who can hang on to the funds or put them in a trust account until closing. If your sale falls through, your purchase contract should dictate where this earnest money should go.
At Harbor View Lending* a DBA of Megastar Financial, we answer questions about this process every day. Call us: (207) 571-8034.