Don't Trip Yourself up While Buying your New Home
What's more fun than getting a bunch of new furniture to adorn your future home? Not much. But making big purchases before your loan closes could be trouble. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be tempted to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making major buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to buy expensive items can also create a mistake: most banks consider your available cash when approving your mortgage loan.
Don't look for a new job. Consistency in your job history is a positive thing to banks and other lenders. Finding a new job (especially one with a bigger paycheck) may not affect your ability to qualify for a mortgage loan. However, getting a new career during the loan process may influence your approval.
Don't take your accounts to a new bank or move around your money. As the lender reviews your mortgage package, you will likely be required to submit bank statements for recent months on your checking and savings accounts, money market funds and other liquid finances. In order to avoid fraud, lenders want to see a consistent portrayal of how you earn your living and where any additional money comes from. Switching banks or moving finances to another account - no matter the purpose - might hinder the review of your accounts.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") for a "good faith" deposit. Until closing, any earnest money actually belongs to you. Although some FSBO sellers might not realize this, your earnest money must go toward your closing expenses. Get a lawyer or other neutral party who is able to hold the funds or place them in a trust account until closing. If your transaction fails, the purchase agreement should document to whom your good faith funds should go.
At First Community Bank of Central Al., we answer questions about this process every day. Call us at (334) 285-8850.