Things to Avoid While Buying a New Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Until your keys are in hand, there still remain some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't buy luxury items. It may be tempting to buy that new sofa for the soon-to-be-yours living room, but it's advisable to stay away from making big ticket purchases like furniture, appliances, jewelry, or cars until closing. You may send up red flags with your lender if you buy your appliances on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also be a mistake: many lenders look at your available cash when approving your mortgage.
Don't get a new job. Stability in your job history is a positive thing to lenders. Finding a new career (especially one with a bigger salary) may not jeopardize your ability to qualify for your mortgage loan. However, switching careers in the middle of the application process could affect your approval.
Don't move finances around or change banks. While your lender considers your mortgage loan application, you will probably be required to provide bank statements for the last two or three months for your checking accounts, savings accounts, money market funds and other liquid wealth. To eliminate potential fraud, most lending institutions need a detailed paper trail to document the source of all funds. Even for innocent purposes, transferring cash or switching banks might make it difficult for the lender to document your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until the sale is complete, the good faith deposit actually belongs to you. Your FSBO seller might not realize that any good faith funds is to be applied to your expenses upon closing. An attorney or other type of neutral party can hang onto your earnest funds, or you may place them temporarily into a trust account until you close. The purchase contract should specify who gets the deposit if the transaction fails.
At Harbor View Lending* a DBA of Megastar Financial, we answer questions about this process every day. Call us at (207) 571-8034.