What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before your loan closes. We have given you a list of actions below you will want to stay away from when waiting for closing.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you purchase your furniture on your credit cards during your loan process. Using cash to buy big items can even create a mistake: many lenders look at your available cash when approving your application.
Don't look for a new job. Your recent job history should show stability. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't switch banks or move money around in your bank accounts. Most lenders will require you to submit recent bank statements of your accounts: checking, savings, money market, and other assets. To avoid fraud, lenders want to see clear documentation of how you earn your living and where any additional wealth comes from. Even for practical reasons, transferring funds or switching banks could make it difficult for your lending institution to document your bank history.
Don't give money directly to your seller (generally in the case of of "for sale by owner") to be used as earnest money. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although your FSBO seller might not know this, your earnest money must go toward your closing expenses. Get an attorney or other neutral person who will hold the funds or put them in a trust account until you close. Should your home purchase fail, your purchase agreement should document where your earnest money should go.
Norcal Capital Group, Inc can walk you through the pitfalls of getting a mortgage. Give us a call at 6507631924.