Things to Avoid While Buying a Home
What's more fun than buying a bunch of new furnishings to go in your future home? Nothing. But making big purchases before your loan closes could be trouble. Until the keys are handed over, there still remain some hurdles to jump. Here are some actions to avoid during the home buying process to be sure the transaction goes well.
Don't empty your wallet on big-ticket items You may be tempted to buy that new easy-chair for the soon-to-be-yours den, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Using cash to buy big-ticket items can even be an issue: many banks take into consideration your cash reserve when approving your loan.
Don't get a new job. Lending Institutions like to see a consistent job history on your paperwork. Finding a new career (particularly one with a bigger salary) may not hinder your ability to qualify for your mortgage loan. However, switching careers during the application process could influence your approval.
Don't move finances around or switch banks. Most lenders will require you to submit recent bank statements of your accounts: savings, checking, money market, and other liquid assets. In order to detect fraud, lenders want to see a clear and consistent picture of how you earn your money and where any additional money comes from. Changing banks or moving funds elsewhere - no matter the reason - may make it difficult for the lender to document your funds.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not the seller until the deal closes. Some FSBO sellers may not realize that any good faith money must be used for your expenses upon closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. The contract should indicate where the deposit goes if the home purchase falls through.
Norcal Capital Group, Inc can walk you through the pitfalls of getting a mortgage. Call us: (650) 689-5684.