What to Avoid During a Home Purchase
What's better than getting a bunch of new stuff to go in your future home? Nothing. But making large purchases before your loan closes could be trouble. There still remain a few major hurdles to jump before the keys are handed over. We have listed some things below you will want to stay away from when waiting for your loan to close.
Don't make expensive purchases. Although you may be planning ways to turn your new home into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using credit cards to buy furniture could compromise your lending process by distorting your numbers. It's even a mistake to make those huge purchases with cash. Lenders are examining your cash on hand when considering your loan.
Don't get a new job. Your recent job history should show consistency. Finding a new career (particularly one with a better salary) may not change your ability to qualify for a mortgage. But in some cases, changing jobs during the loan application process may bring concern and affect your approval.
Don't move money around or change banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and others) will likely be studied as the lender makes decisions regarding your loan application. To eliminate fraud, lenders will need clear documentation of how you earn your money and where any additional money comes from. Even for innocent reasons, moving around cash or changing banks might make it difficult for the lending institution to verify your bank history.
Don't give money directly to your seller (commonly in cases of "for sale by owner") to be used as earnest money. Until the completion of the deal, any good faith deposit actually belongs to you. Although some individual sellers might not know this, your good faith funds must be used for 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. The disposition of earnest money, if your home purchase falls through, should be specified in the contract with your seller.
First Community Bank of Central Al. can walk you through the pitfalls of getting a mortgage. Call us at (334) 285-8850.