What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before the house is realy yours. We have given you a list of things below we suggest you stay away from when waiting for closing.
Don't overspend on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you purchase your furniture on your credit cards during your loan process. Since lending institutions are looking closely at your financial accounts, a large cash purchase is also a mistake.
Don't get a new career. Your recent career history should show consistency. Getting a new job before you start the application process for a mortgage may not compromise your approval at all. However, switching jobs during the loan process might influence your approval.
Don't switch your accounts to a new bank or move around your finances. Your lender will require you to produce recent bank statements of accounts in your name: checking, savings, money market, and other liquid assets. To avoid fraud, lenders need a clear and consistent picture of how you earn your money and where any additional wealth comes from. Switching banks or transferring finances elsewhere - no matter the reason - may hinder the documentation of your funds.
Don't give money directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. As a rule, your earnest money belongs to you, not the seller up until the sale is final. Your FSBO seller may not realize that any good faith money is to go toward your expenses upon closing. We recommend that you put the money into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. If your transaction fails, the contract with the seller should indicate where the good faith deposit should go.
First Community Bank of Central Al. can answer questions about these "Don'ts" and many others. Call us: (334) 285-8850.