Don't Trip Yourself up While Buying your Home
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. It's wise to remember that until closing, your lender is watching your accounts very closely. We have given you a list of things below we suggest you stay away from when waiting for closing.
Don't buy big-ticket items. It may be tempting to buy that new easy-chair for the soon-to-be-yours living room, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. Using plastic to buy furniture could jeopardize your lending process by changing your numbers dramatically. Because lenders are perusing your bank accounts, a large cash purchase is also a bad idea.
Don't get a new job. Stability in your work history is a positive thing to banks and other lenders. Getting a new job before you start the application process for a loan may not get in the way of your approval at all. But in some cases, switching jobs during the mortgage application process could bring concern and hinder your approval.
Don't move finances around or switch banks. Most lenders will ask for recent bank statements of your accounts: checking, savings, money market, and other assets. In order to avoid fraud, lenders need a clear and consistent picture of how you earn your living and where additional wealth comes from. No matter the reason, changing banks or transferring funds may raise a red flag with your lender and slow your qualification process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith money actually belongs to you. Some FSBO sellers might not know that your earnest money must be used for your expenses upon closing. You'll need to put the funds into a trust account, or get an attorney to hold them until the closing of the sale. The disposition of earnest money, if your home purchase falls through, should be documented in the purchase agreement with the seller.
First Community Bank of Central Al. can answer questions about these "Don'ts" and many others. Give us a call at (334) 285-8850.