What to Avoid During your Home Purchase

What's more fun than buying a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until your loan closes, there still remain some hoops to jump through. Here are some actions to stay clear of before closing to be sure the transaction goes well.

Don't buy big-ticket items. Although you will be dreaming of ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Using plastic to buy furniture could jeopardize your loan process by altering your numbers dramatically. Because lending institutions are perusing your bank accounts, a large cash purchase is also not advised.

Don't go on a job search. Stability in your job history is a good thing to lending institutions. Finding a new career (especially one with a better salary) may not hinder your ability to qualify for a mortgage loan. But for some people, switching jobs during the mortgage loan application process could bring concern and stymie your application.

Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for all of your accounts (savings, checking, money market, and other assets) will probably be analyzed as the lender makes decisions regarding your approval. To detect fraud, lenders need clear documentation of how you earn your money and where additional money comes from. No matter the purpose, moving banks or moving money from one account to another might raise a red flag with your lender and slow down your loan process.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith money remains yours. Some FSBO sellers may not know that your good faith funds must be used for your expenses upon closing. Find an attorney or other neutral party who is able to hold the funds or put them in a trust account until closing. The final disposition of earnest money, if your sale falls through, should be indicated in the purchase agreement with the seller.

Harbor View Lending* a DBA of Megastar Financial can walk you through the pitfalls of getting a mortgage. Call us: (207) 571-8034.