What to Avoid During a Home Purchase
What's more fun than getting a bunch of new stuff to go in your future home? Nothing. But making big purchases before closing could be trouble. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until the loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to purchase expensive items can also create a mistake: most lenders look at your available cash when approving your loan.
Don't get a new career. Consistency in your career history is a positive thing to banks and other lenders. Finding a new career (especially one with a better paycheck) may not jeopardize your ability to qualify for a loan. However, switching jobs in the middle of the application process may affect whether or not you are approved.
Don't move money around or change banks. As the lending institution reviews your mortgage loan application, you will likely be required to produce bank statements for recent months for your checking accounts, savings accounts, money market funds and other liquid finances. To detect potential fraud, most loans want detailed paperwork to document the source of all incoming funds. No matter the reason, changing banks or transferring funds can raise a red flag with your lender and impede your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until the completion of the deal, the good faith deposit remains yours. Your seller may not know that the good faith funds is to be used for your expenses upon closing. An attorney or other type of neutral party can hang onto your earnest funds, or you may place them temporarily into a trust account until closing. The final disposition of earnest funds, if your sale fails, should be indicated in the purchase agreement with your 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.