What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. It's wise to remember that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't throw your money around. Although you will be listing ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until your 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. It's also a mistake to make those large purchases with cash. Lenders are looking at your cash on hand when considering your loan.
Don't look for a new career. Consistency in your career history is a positive thing to banks and other lenders. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, if you switch careers before you qualify, your process could fail or be slowed down.
Don't move finances around or change banks. Your lending institution will require you to produce recent bank statements on all of your accounts: checking, savings, money market, and other assets. The lending institution is looking for a steady rise and fall of your money over the pay period, in order to avoid fraud. Even for practical reasons, moving around money or changing banks may make it more difficult for your lender to verify your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your good faith money belongs to you, not to the seller until the sale is final. Your seller might not know that this good faith money should go toward your expenses upon closing. Get a lawyer or other neutral party who can hang on to the money or put it in a trust account until closing. Your purchase contract should indicate where the funds go if the transaction does not go through.
At First Community Bank of Central Al., we answer questions about this process every day. Give us a call at (334) 285-8850.