What to Avoid During your Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves their loan. Until your loan closes, there are still some hurdles to jump. Here are some actions to avoid before closing to be sure your transaction goes smoothly.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to purchase big-ticket items can even be a problem: many lenders consider your available cash when approving your mortgage loan.
Don't look for a new career. Your recent work history should show stability. Finding a new job (especially one with a bump in salary) may not hinder your ability to qualify for your mortgage. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't move finances around or change banks. As your lending institution considers your mortgage package, you will likely be asked to provide bank statements for the last few months on your saving and checking accounts, money market funds and other liquid finances. To detect potential fraud, most loans need a detailed paper trail to determine the source of all cash. Changing banks or moving funds to another account - no matter the purpose - might make it difficult for the lender to verify your funds.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. As a rule, your good faith deposit is yours, not the seller's until closing. Some sellers might not realize that your good faith funds should be applied to your expenses at closing. A neutral party, like an attorney can hold your earnest money, or you may put it temporarily into a trust account until closing. Your purchase contract should dictate to whom the deposit goes if the transaction falls through.
At First Community Bank of Central Al., we answer questions about this process every day. Give us a call at (334) 285-8850.