What to Avoid During your 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 lender approves their loan. Until your keys are in hand, there are still some hoops to jump through. We have listed some actions below you will want to stay away from when waiting for closing.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until the loan closes. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't go on a career search. Your recent work history should show stability. Getting a new job before you start the application process for a mortgage loan may not affect your approval at all. However, switching jobs in the middle of the loan process may affect your approval.
Don't change banks or move money around in your bank accounts. Your lender will require you to provide recent bank statements of accounts in your name: checking, savings, money market, and other liquid assets. To detect potential fraud, most lending institutions require detailed paperwork to determine the source of all incoming funds. No matter the reason, switching banks or moving funds from one account to another could raise a red flag with your lender and slow down your qualification process.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be used as earnest money. As a rule, your good faith money belongs to you, not the seller until the deal closes. Your FSBO seller may not realize that any good faith money must be used for your expenses upon closing. Get an attorney or other neutral person who can hang on to the money or put it in a trust account until closing. The disposition of good faith money, if your home purchase fails, should be specified in the purchase agreement with the 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.