What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. Until the house is really yours, there still remain some hoops to jump through. 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 buy that new Turkish rug for the soon-to-be-yours den, but it's advisable to stay away from making large buys like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Using cash to buy big items can also create a mistake: most banks consider your cash on hand when approving your mortgage loan.
Don't go on a job search. Your recent career history should show stability. Changing jobs may not affect your ability to qualify for a mortgage loan - especially if you are improving your salary. However, switching jobs in the middle of the approval process may influence your approval.
Don't move money around or change banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and others) will probably be reviewed as the lending institution makes decisions regarding your mortgage application. The lender is looking for a consistent rise and fall of your money each month, in the interest of avoiding fraud. Switching banks or moving funds to another account - no matter the purpose - could hinder the documentation of your accounts.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Your seller might not know that this good faith money must go toward your expenses at closing. We recommend that you put the money into a trust account, or get an attorney to hold it until closing. The final disposition of earnest funds, in the case of a failed transaction, should be documented in the purchase agreement with the seller.
First Community Bank of Central Al. can answer questions about these "Don'ts" and many others. Give us a call at (334) 285-8850.