Things to Avoid While Buying a New Home
What's better than buying a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before your loan closes can be a misstep. There are still a few major hurdles to jump before closing. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to buy big items can even create a problem: most lenders look at your available cash when approving your loan.
Don't get a new career. Stability in your job history is a good thing to banks and other lenders. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, getting a new job during your loan process may influence whether or not you are approved.
Don't change banks or move cash around in your bank accounts. As your lending institution reviews your loan package, you will probably be instructed to submit bank statements for the last few months for your checking accounts, savings accounts, money market funds and other liquid wealth. To eliminate potential fraud, most lending institutions want a detailed paper trail to document the source of all cash. Even for innocent purposes, transferring cash or changing banks may make it harder for your lender to document your bank history.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller might not know this, your good faith money must be applied to the buyer's closing expenses. It's advisable to put the funds into a trust account, or get an attorney to hold them until the deal closes. Should your sale fall through, the contract with the seller should specify to whom your earnest money should go.
Northeast Bancorp of America, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call: (440) 234-9660.