What to Avoid During your Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. It's wise to remember that until your keys are in hand, your lender is watching your accounts very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be tempted to buy that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to avoid making large purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. You may send up red flags with your lender if you buy your appliances on your credit cards in the middle of your loan process. Using cash to buy big items can even be a problem: most lending institutions consider your cash on hand when approving your mortgage loan.
Don't get a new job. Stability in your career history is a positive thing to lenders. Changing jobs may not affect 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 mortgage process could fail or be bogged down.
Don't move money around or switch banks. Your lending institution will instruct the submission of recent bank statements for all of your accounts: checking, savings, money market, and other assets. To eliminate potential fraud, most lenders require detailed paperwork to determine the source of all cash. Even for practical reasons, transferring money or switching banks could make it harder for the lending institution to document your bank history.
Don't give money directly to your seller (generally in cases of "for sale by owner") for a "good faith" deposit. As a rule, your earnest money is yours, not the seller's up until the deal closes. Any earnest money is to be used for your expenses closing; some FSBO sellers may not realize this. Find a lawyer or other neutral party who can hold the funds or put them in a trust account until closing. If your home purchase fails, the purchase contract should indicate where the good faith deposit should go.
First Community Bank of Central Al. can walk you through the pitfalls of getting a mortgage. Give us a call: (334) 285-8850.