What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves their loan. Until the house is really yours, there are still some hurdles to jump. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items It may be tempting to buy that new couch for the soon-to-be-yours parlor, but it's best to stay away from making large purchases like furniture, appliances, jewelry, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Since lending institutions are examining your bank accounts, a large cash purchase is also a mistake.
Don't look for a new job. Lenders like to see a consistent work history on your paperwork. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are going to be making more money. However, if you switch careers before approval, your loan process could fail or be slowed down.
Don't move money around or change banks. While the lending institution considers your loan application, you will probably be instructed to submit bank statements for the last two or three months for your checking accounts, savings accounts, money market funds and other liquid finances. The lending institution will need to see a consistent flow of your funds over the pay period, in order to avoid fraud. Switching banks or moving funds elsewhere - even if its merely to pool funds - might hinder the review of your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Although your seller may not realize this, any good faith money must be used for your closing expenses. An attorney or other type of neutral party can hold onto your earnest money, or you may put it temporarily into a trust account until closing. The final disposition of earnest money, in the case of a failed transaction, should be documented in the contract with your seller.
First Community Bank of Central Al. can walk you through the pitfalls of getting a mortgage. Give us a call at (334) 285-8850.