Things to Avoid While Purchasing a Home

What's more fun than buying a bunch of new stuff to adorn your future home? Nothing. But buying big ticket items before your loan closes can be harmful. Until the house is really yours, there are still some hoops to jump through. Below you'll find a list of actions to avoid during this critical time of your home purchase.

Don't make expensive purchases. You may be tempted to buy that new Turkish rug for the soon-to-be-yours den, but it's advisable to stay away from making major purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a bad idea to make those large purchases using cash. Lenders are examining your available cash when considering your loan.

Don't get a new career. Consistency in your job history is a positive thing to lenders. Getting a new job before you apply for a mortgage may not compromise your approval at all. However, if you switch careers before you qualify, your loan process could fail or be slowed down.

Don't switch banks or move cash around in your accounts. While your lending institution considers your mortgage package, you will likely be asked to provide bank statements for the last few months for your checking accounts, savings accounts, money market accounts and other liquid wealth. To avoid fraud, lenders want to see a consistent portrayal of how you earn your living and where additional wealth comes from. Switching banks or transferring money to another account - even if its merely to pool funds - could hinder the review of your accounts.

Don't hand over 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 transaction is final. Your seller may not realize that these good faith funds should go toward your expenses at closing. We recommend that you put the money into a trust account, or get an attorney to hold it until the deal closes. Your purchase contract should specify who gets the deposit if the transaction does not go through.

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