What to Avoid During your Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Until the house is really yours, there are still some hoops to jump through. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. It may be tempting to buy that new Turkish rug for the soon-to-be-yours living room, but it's best to stay away from making major buys like furniture, appliances, jewelry, or cars until closing. Using plastic to buy furniture could jeopardize your lending process by changing your numbers dramatically. It's even a red flag to make those big purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't get a new job. Lenders like to see a consistent career history on your application forms. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, if you switch careers before your loan is approved, your loan process could fail or be bogged down.
Don't change banks or move finances around in your accounts. Most lenders will ask for recent bank statements of your accounts: checking, savings, money market, and other assets. To avoid fraud, lenders want to see clear documentation of how you earn your money and where additional money comes from. Switching banks or transferring money to another account - even if its only to consolidate funds - may make it difficult for the lender to document your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until closing, the earnest money actually belongs to you. Your FSBO seller may not know that the good faith funds is to be applied to your expenses upon closing. We recommend that you put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. The purchase agreement should dictate who keeps the money if the transaction fails.
At First Community Bank of Central Al., we answer questions about this process every day. Call us at (334) 285-8850.