Don't Trip Yourself up While Buying a New Home
What's better than buying a bunch of new furniture to go in your future home? Not much. But making large purchases before your loan closes could be trouble. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Here are some actions to avoid during the home buying process to assure your transaction goes well.
Don't buy big-ticket items. Although you will be dreaming of ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Using credit cards to buy new living room furniture could compromise your loan process by distorting your numbers. It's even a red flag to make those large purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a career search. Lenders like to see a consistent job history on your application forms. Finding a new career (especially one with a bigger paycheck) may not jeopardize your ability to qualify for a loan. But in some cases, changing jobs during the mortgage application process could bring concern and affect your application.
Don't move money around or change banks. As your lending institution considers your loan application, you will likely be required to produce bank statements for the last few months for your checking and savings accounts, money market funds and other liquid assets. To detect fraud, lenders look for clear documentation of how you earn your money and where additional funds come from. No matter the reason, moving banks or moving money from one account to another might raise a red flag with your lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your earnest money does not belong to the seller: it remains yours until the sale closes. Although your FSBO seller may not realize this, any good faith funds must be used for the buyer's closing expenses. You'll need to put the funds into a trust account, or get an attorney to hold them until the deal closes. The disposition of earnest funds, in the case of a failed transaction, should be specified in the purchase agreement with the seller.
At Norcal Capital Group, Inc, we answer questions about this process every day. Call us at 6507631924.