What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be tempted to buy that new sofa for the soon-to-be-yours living room, but it's best to avoid making large buys like furniture, appliances, jewelry, or vacations until closing. Using plastic to buy new living room furniture could jeopardize your loan process by changing your numbers dramatically. It's even a mistake to make those big purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't look for a new career. Lending Institutions like to see a consistent job history on your application forms. Finding a new career (particularly one with a better paycheck) may not hinder your ability to qualify for a mortgage loan. However, if you switch careers before approval, your process could fail or be slowed down.
Don't move money around or change banks. As your lender reviews your mortgage loan application, you will probably be required to provide bank statements for recent months on your checking and savings accounts, money market accounts and other liquid assets. To eliminate potential fraud, most lenders require a detailed paper trail to determine the source of all funds. No matter the purpose, switching banks or moving funds from one account to another may raise a red flag with your lender and slow down your qualification process.
Don't give funds directly to your seller (generally in cases of "for sale by owner") for earnest money. Until closing, the good faith money actually belongs to you. Some sellers may not know that this earnest money is to be used for your expenses upon closing. It's best to put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. The final disposition of good faith money, if your sale falls through, should be specified in the contract with your seller.
At Northeast Bancorp of America, Inc., we answer questions about this process every day. Give us a call: (440) 234-9660.