Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves their loan. There are still a few major hurdles to jump before your loan closes. We have given you a list of things below we suggest you avoid when waiting for your loan to close.
Don't buy luxury items. Although you may be dreaming of ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until your loan closes. Financing your 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 bad idea to make those big purchases with cash. Lenders are looking at your cash reserve when considering your loan.
Don't get a new career. Lending Institutions like to see a consistent career history on your application. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are going to be making more money. But for some people, getting a new career during the mortgage application process might raise concern and stymie your application.
Don't take your accounts to a new bank or move around your money. Bank statements from recent months for your accounts (savings, checking, money market, and others) will probably be studied as the lender makes decisions regarding your approval. In order to avoid fraud, lenders will need clear documentation of how you earn your living and where additional wealth comes from. No matter the reason, switching banks or moving money from one account to another may raise a red flag with your lender and slow down your approval process.
Don't give funds directly to your seller (generally in cases of "for sale by owner") to be considered a "good faith" deposit. Until closing, the earnest money actually belongs to you. Although your seller might not realize this, any earnest money should be applied to your closing expenses. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. Your contract should document to whom the funds go if the transaction does not go through.
First Community Bank of Central Al. can answer questions about these "Don'ts" and many others. Give us a call at (334) 285-8850.