Don't Trip Yourself up While Buying a New Home
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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before closing. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until closing. Your lender may send up red flags if you buy new electronics on your credit cards in the middle of your loan process. Using cash to purchase expensive items can also create a problem: most banks take into consideration your cash on hand when approving your loan.
Don't look for a new career. Your recent job history should show consistency. 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, getting a new career during the loan application process could raise concern and hinder your application.
Don't move cash around or change banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and others) will be studied as the lending institution considers your approval. The lender is looking for a steady rise and fall of your funds over the pay period, in the interest of avoiding fraud. Switching banks or moving money elsewhere - for whatever purpose - may make it harder for the lender to verify your funds.
Don't give cash directly to your seller (usually in cases of "for sale by owner") to be considered a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Some FSBO sellers may not realize that the good faith funds should go toward your expenses at closing. It's best to put the funds into a trust account, or get an attorney to hold them until the closing of the sale. If your sale falls through, your purchase agreement should dictate to whom your earnest money should go.
At Community Bank of Oelwein, we answer questions about this process every day. Call us: (319) 283-4000 .