Don't Trip Yourself up While Buying a Home
What's better than buying a bunch of new furnishings to go in your future home? Nothing. But making big purchases before your loan closes could be trouble. Until closing, there are still some hoops to jump through. Here are some things to avoid before closing to assure your transaction goes well.
Don't throw your money around. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. It's even a bad idea to make those large purchases with cash. Lending Institutions are looking at your available cash when considering your loan.
Don't look for a new career. Consistency in your job history is a good thing to lending institutions. Changing jobs may not compromise your ability to qualify for a mortgage loan - especially if you are going to be making more money. But in some cases, changing careers during the loan approval process could raise concern and affect your approval.
Don't switch banks or move cash around in your bank accounts. As the lender considers your mortgage loan package, you will likely be instructed to provide bank statements for recent months on your checking accounts, savings accounts, money market accounts and other liquid assets. To eliminate potential fraud, most lending institutions require a detailed paper trail to verify the source of all incoming funds. No matter the reason, moving banks or moving funds from one account to another can raise a red flag with the lender and slow your approval process.
Don't give money directly to your seller (generally in cases of "for sale by owner") for a "good faith" deposit. Until the completion of the deal, any good faith deposit remains yours. Some sellers may not know that this good faith money should be applied to your expenses at closing. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until you close. If your home purchase fails, your purchase agreement should specify to whom your good faith funds should go.
First Community Bank of Central Al. can answer questions about these "Don'ts" and many others. Call us at (334) 285-8850.