What to Avoid During your Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves their loan. It's wise to remember that until closing, your lender is watching your accounts very closely. We have listed some things below we suggest you stay away from when waiting for your loan to close.
Don't overspend on big-ticket items It may be tempting to order that new couch for the soon-to-be-yours parlor, but it's advisable to stay away from making large buys like furniture, appliances, jewelry, or vacations until your home loan closes. Financing your 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 expensive items can even be a problem: many lenders consider your available cash when approving your loan.
Don't go on a job search. Lenders look for a consistent career history on your paperwork. Finding a new career (particularly one with a better salary) may not jeopardize your ability to qualify for a mortgage loan. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't switch your accounts to a new bank or move around your money. Bank statements from the last few months for all of your accounts (savings, checking, money market, and other accounts) will likely be reviewed as the lender makes decisions regarding your loan application. The lending institution is looking for a consistent rise and fall of your money over the month, in the interest of avoiding fraud. Even for innocent reasons, moving around money or changing banks might make it more difficult for the lender to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your earnest money belongs to you, not to the seller until closing. Some FSBO sellers may not know that any good faith money must go toward your expenses at closing. It's wise to put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. Your purchase agreement should indicate where the money goes if the transaction falls through.
At Harbor View Lending* a DBA of Megastar Financial, we answer questions about this process every day. Call us: (207) 571-8034.