What to Avoid During your Home Purchase
What's better than getting a bunch of new furnishings to go in your future home? Not much. But making big purchases before closing can be a misstep. Until closing, there are still some hoops to jump through. We have given you a list of actions below you will want to stay away from when waiting for your loan to close.
Don't make expensive purchases. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. Using credit cards to buy furniture could jeopardize your loan process by altering your numbers dramatically. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Lenders feel comfortable seeing a consistent work history on your application forms. Finding a new job (particularly one with a bigger paycheck) may not affect your ability to qualify for a loan. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't switch banks or move cash around in your accounts. Your lender will ask for recent bank statements on your accounts: checking, savings, money market, and other liquid assets. In order to detect fraud, lenders need clear documentation of how you earn your living and where any additional funds come from. Switching banks or moving money to another account - no matter the reason - could make it harder for the lender to document your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the earnest money actually belongs to you. Although your seller may not understand this, the good faith funds should be used for your closing expenses. Get a lawyer or other neutral person who is able to hang on to the funds or place them in a trust account until you close. If your sale falls through, the purchase contract should indicate to whom your good faith funds should go.
First Community Bank of Central Al. can walk you through the pitfalls of getting a mortgage. Call us at (334) 285-8850.