What to Avoid During your Home Purchase
What's better than getting a bunch of new furniture to go in your future home? Not much. But buying big ticket items before closing can be a mistake. Until your keys are in hand, there still remain some hoops to jump through. We have given you a list of things below we suggest you avoid when waiting for closing.
Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and car purchases until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to buy expensive items can even be a bad idea: most lenders consider your cash reserve when approving your mortgage.
Don't go on a job search. Your recent work history should show stability. Getting a new job before you start the application process for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't move money around or switch banks. Your lender will instruct the submission of recent bank statements on all of your accounts: savings, checking, money market, and other liquid assets. In order to avoid fraud, lenders look for clear documentation of how you earn your money and where any additional funds come from. No matter the reason, switching banks or moving funds from one account to another may raise a red flag with the lender and impede your qualification process.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. Until closing, the good faith deposit remains yours. The good faith money is to be applied to your expenses upon closing; some sellers may not understand this. Get an attorney or other neutral party who will hang on to the funds or put them in a trust account until you close. If your transaction fails, the purchase agreement should document where the earnest money should go.
At First Community Bank of Central Al., we answer questions about this process every day. Call us: (334) 285-8850.