What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. There are still a few major hurdles to jump before your loan closes. We have listed some things below you will want to avoid when waiting for closing.

Don't buy big-ticket items. Although you may be listing ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Using cash to purchase big items can also be an issue: many lenders take into consideration your cash on hand when approving your mortgage.

Don't get a new career. Consistency in your job history is a positive thing to lending institutions. Getting a new job before you start the application process for a mortgage loan may not compromise your approval at all. However, switching jobs in the middle of the approval process could affect your approval.

Don't move finances around or change banks. Most lenders will require you to produce recent bank statements for accounts in your name: checking, savings, money market, and other assets. To avoid potential fraud, most lending institutions require a detailed paper trail to document the source of all incoming funds. Even for innocent reasons, moving around money or switching banks may make it more difficult for the lending institution to document your account history.

Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until the completion of the deal, the good faith deposit remains yours. Although some FSBO sellers may not understand this, any good faith money must be used for the buyer's closing expenses. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until closing. If your transaction fails, the contract with the seller should dictate where this earnest money should go.

Harbor View Lending* a DBA of Megastar Financial can answer questions about these "Don'ts" and many others. Call us at (207) 571-8034.