Things to Avoid While Buying a New Home
What's better than buying a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before your loan closes can be a misstep. It's best to remember that until you get the keys, your lender is watching your finances very closely. Here are some things to avoid during the home buying process to be sure the transaction goes well.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Because lenders are examining your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Consistency in your career history is a good thing to banks and other lenders. Getting a new career before you apply for a loan may not compromise your approval at all. But in some cases, changing jobs during the mortgage application process could bring concern and hinder your approval.
Don't move finances around or change banks. Your lender will require you to submit recent bank statements on accounts in your name: savings, checking, money market, and other assets. To detect fraud, lenders require a clear and consistent picture of how you earn your money and where additional wealth comes from. Changing banks or moving money to another account - even if its merely to consolidate funds - could hinder the review of your funds.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith deposit actually belongs to you. Your FSBO seller might not know that the good faith money should go toward your expenses upon closing. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until you close. The disposition of earnest money, in the case of a failed transaction, should be indicated in the contract with your seller.
Northeast Bancorp of America, Inc. can answer questions about these "Don'ts" and many others. Give us a call at (440) 234-9660.