What to Avoid During your Home Purchase
What's better than buying a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Until the keys are handed over, there still remain some hurdles to jump. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. Although you will be listing ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. It's also a bad idea to make those large purchases using cash. Lenders are examining your available cash when considering your loan.
Don't go on a job search. Stability in your work history is a good thing to banks and other lenders. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are getting a better salary. But for some people, changing jobs during the loan approval process might raise concern and affect your application.
Don't take your accounts to a new bank or move around your money. As the lending institution considers your mortgage package, you will probably be required to produce bank statements for recent months for your saving and checking accounts, money market accounts and other liquid wealth. To avoid potential fraud, most loans want detailed paperwork to determine the source of all funds. Even for practical reasons, transferring funds or switching banks could make it harder for your lending institution to document your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until closing. Your FSBO seller might not know that your earnest money is to go toward your expenses upon closing. Get an attorney or other neutral party who is able to hang on to the funds or place them in a trust account until you close. The final disposition of good faith funds, if your sale fails, 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.