Don't Trip Yourself up While Buying your Home
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 the house is realy yours. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's also a red flag to make those huge purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't get a new job. Your recent career history should show stability. Changing jobs may not compromise your ability to qualify for a mortgage loan - especially if you are improving your salary. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't change banks or move cash around in your bank accounts. Bank statements from recent months for all of your accounts (checking, savings, money market, and other accounts) will be reviewed as the lender makes decisions regarding your loan application. Your lender needs to see a steady flow of your funds each pay period, in the interest of avoiding fraud. No matter the purpose, changing banks or transferring funds might raise a red flag with the lender and slow down your loan process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until the sale closes. Some FSBO sellers might not realize that the good faith money is to go toward your expenses upon closing. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the closing of the sale. The disposition of good faith money, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
At Northeast Bancorp of America, Inc., we answer questions about this process every day. Give us a call at (440) 234-9660.