Things to Avoid While Purchasing a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. Keep in mind that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't make expensive purchases. Although you may be listing ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until your loan closes. Financing new Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Since lenders are reviewing your financial accounts, a large cash purchase is also not advised.
Don't go on a career search. Lenders look for a consistent work history on your application. Finding a new career (especially one with a bigger paycheck) may not hinder your ability to qualify for a mortgage loan. But in some cases, changing careers during the loan approval process could bring concern and hinder your approval.
Don't take your accounts to a new bank or move around your cash. While the lending institution considers your mortgage loan package, you will probably be instructed to submit bank statements for the last few months on your checking and savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans need a thorough paper trail to determine the source of all cash. No matter the purpose, changing banks or transferring money could raise a red flag with your lender and slow your loan process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until the sale is final. Your seller might not know that any good faith funds must be applied to your expenses upon closing. Find a lawyer or other neutral party who will hang on to the money or put it in a trust account until you close. The purchase contract should document where the money goes if the home purchase fails.
At Northeast Bancorp of America, Inc., we answer questions about this process every day. Give us a call at (440) 234-9660.