Don't Trip Yourself up 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 loan is approved. It's wise to remember that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items It may be tempting to buy that new sofa for the soon-to-be-yours parlor, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or cars until closing. Your credit numbers could change suddenly if you make a huge purchase using plastic. It's even a bad idea to make those big purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't look for a new career. Lenders look for a consistent career history on your application forms. Getting a new job before you apply for a mortgage loan may not affect your approval at all. However, if you switch careers before you qualify, your loan process could fail or be bogged down.
Don't switch your accounts to a new bank or move around your money. Most lenders will ask for recent bank statements of your accounts: savings, checking, money market, and other liquid assets. The lender is looking for a steady rise and fall of your money over the month, in the interest of avoiding fraud. No matter the purpose, changing banks or transferring funds might raise a red flag with the lender and slow down your loan process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any earnest money actually belongs to you. The good faith funds are to be used for your expenses upon closing; some sellers might not understand this. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. Your purchase contract should indicate who gets the money if the home purchase fails.
At Norcal Capital Group, Inc, we answer questions about this process every day. Give us a call at (650) 689-5684.