Things to Avoid While Buying a Home

Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. Until your loan closes, there still remain some hoops to jump through. Here are some things to avoid before closing to be sure your transaction goes smoothly.

Don't buy big-ticket items. It may be tempting to order that new sofa for the soon-to-be-yours den, but it's advisable to stay away from making major buys like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Because lending institutions are reviewing your financial accounts, a large cash purchase is also not advised.

Don't go on a career search. Your recent career history should show stability. Getting a new job may not compromise your ability to qualify for a mortgage loan - especially if you are getting a better salary. However, finding a new career during the loan process could affect whether or not you are approved.

Don't move cash around or switch banks. Your lender will instruct the submission of recent bank statements of all of your accounts: checking, savings, money market, and other assets. Your lender needs to see a steady rise and fall of your money each month, in the interest of avoiding fraud. Changing banks or transferring finances elsewhere - no matter the reason - could make it difficult for your lender to verify your funds.

Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until the transaction is final. Although your seller may not realize this, your good faith money should be applied to your closing expenses. You'll need to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until closing. The disposition of good faith money, if your sale fails, should be specified in the contract with the seller.

Northeast Bancorp of America, Inc. can answer questions about these "Don'ts" and many others. Call us at (440) 234-9660.