Don't Trip Yourself up While Buying a Home
What's more fun than buying a bunch of new furniture to adorn your future home? Nothing. But buying big ticket items before closing can be a misstep. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy luxury items. You may be tempted to order that new sofa for the soon-to-be-yours parlor, but it's best to avoid making big ticket buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. You may send up red flags with your lender if you finance new furniture on your credit cards during your loan process. Because lending institutions are perusing your bank accounts, a large cash purchase is also not advised.
Don't look for a new career. Lending Institutions look for a consistent career history on your application. Getting a new career before you apply for a mortgage loan may not get in the way of your approval at all. However, switching jobs in the middle of your application process may influence whether or not you are approved.
Don't switch banks or move finances around in your bank accounts. Your lending institution will instruct the submission of recent bank statements on accounts in your name: savings, checking, money market, and other assets. To eliminate potential fraud, most loans need a detailed paper trail to determine the source of all cash. Even for innocent purposes, moving around money or changing banks might make it difficult for the lending institution to confirm your bank history.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be used as earnest money. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Your good faith money is to go toward your expenses closing; some sellers may not realize this. You'll want to put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. The disposition of earnest money, in the case of a failed transaction, should be indicated in the purchase agreement with your seller.
Northeast Bancorp of America, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call at (440) 234-9660.