Don't Trip Yourself up While Buying a Home
Some 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. Until closing, there are still some hoops to jump through. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't throw your money around. Although you will be planning ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and vehicle purchases until your loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a red flag to make those big-ticket purchases using cash. Lenders are examining your cash reserve when considering your loan.
Don't get a new career. Lending Institutions feel comfortable seeing a consistent career history on your application. Finding a new career (especially one with a better paycheck) may not jeopardize your ability to qualify for your mortgage loan. But for some people, changing careers during the loan application process could bring concern and stymie your application.
Don't take your accounts to a new bank or move around your money. Bank statements from the last few months for your accounts (savings, checking, money market, and other assets) will likely be studied as the lending institution makes decisions regarding your mortgage application. To detect potential fraud, most loans require a detailed paper trail to determine the source of all incoming funds. Switching banks or transferring funds to another account - no matter the purpose - may make it harder for the lender to review your funds.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller may not know this, your earnest money must be applied to the buyer's closing expenses. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until you close. The disposition of good faith funds, if your sale falls through, should be documented in the purchase agreement with the seller.
At Northeast Bancorp of America, Inc., we answer questions about this process every day. Call us at (440) 234-9660.