Things to Avoid While Purchasing a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Until the house is really yours, there are still some hoops to jump through. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until the closing of your loan. You may send up red flags with your lender if you buy new appliances on your credit cards in the middle of your loan process. Because lending institutions are reviewing your bank accounts, a large cash purchase is also a mistake.
Don't get a new career. Consistency in your career history is a positive thing to banks and other lenders. Finding a new career (especially one with a better paycheck) may not change your ability to qualify for your mortgage. But for some, getting a new job during the mortgage approval process may bring concern and stymie your approval.
Don't switch your accounts to a new bank or move around your cash. Your lender will instruct the submission of recent bank statements of your accounts: savings, checking, money market, and other liquid assets. To eliminate potential fraud, most lenders require thorough paperwork to document the source of all funds. No matter the reason, switching banks or moving funds from one account to another might raise a red flag with your lender and slow your loan process.
Don't give money directly to your seller (commonly in cases of "for sale by owner") for a "good faith" deposit. Until closing, the good faith money actually belongs to you. Some FSBO sellers may not realize that your good faith funds must go toward your expenses upon closing. Get a lawyer or other neutral person who can hang on to the funds or place them in a trust account until you close. If your transaction fails, the purchase agreement should dictate where your good faith funds should go.
At Norcal Capital Group, Inc, we answer questions about this process every day. Call us at (650) 689-5684.