Don't Trip Yourself up While Buying your Home
What's better than buying a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before your loan closes can be harmful. Until your keys are in hand, there still remain some hurdles to jump. Here are some things to avoid during the home buying process to be sure the transaction goes well.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. Since lenders are looking closely at your bank accounts, a large cash purchase is also a mistake.
Don't go on a career search. Your recent job history should show stability. Finding a new career (especially one with a better paycheck) may not change your ability to qualify for your loan. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't change banks or move money around in your bank accounts. As your lender reviews your loan package, you will likely be required to produce bank statements for recent months on your checking accounts, savings accounts, money market accounts and other liquid wealth. To detect potential fraud, most lending institutions want detailed paperwork to verify the source of all cash. Changing banks or moving finances elsewhere - even if its merely to consolidate funds - may hinder the review of your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Your earnest funds are to go toward your expenses upon closing; some sellers might not know this. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until closing. Your contract should dictate who gets the deposit if the transaction fails.
At First Community Bank of Central Al., we answer questions about this process every day. Call us: (334) 285-8850.