Things to Avoid While Purchasing a New Home
What's more fun than getting a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes can be harmful. Until the keys are handed over, there are still some hurdles to jump. We have listed some things below you will want to stay away from when waiting for closing.
Don't buy luxury items. You may be tempted to buy that new Turkish rug for the soon-to-be-yours living room, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or vacations until closing. Using credit cards to buy furniture could jeopardize your loan process by distorting your numbers. Since lending institutions are reviewing your bank accounts, a large cash purchase is also a bad idea.
Don't look for a new career. Lending Institutions like to see a consistent work history on your application. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are getting a better salary. But in some cases, changing careers during the mortgage application process might raise concern and hinder your application.
Don't move cash around or switch banks. Most lenders will require you to provide recent bank statements of accounts in your name: savings, checking, money market, and other liquid assets. To detect potential fraud, most lending institutions want a thorough paper trail to verify the source of all incoming funds. No matter the purpose, moving banks or moving funds from one account to another could raise a red flag with the lender and slow down your loan process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until the completion of the deal, any earnest money actually belongs to you. Although some FSBO sellers might not understand this, the good faith money must go toward the buyer's closing expenses. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until closing. The purchase agreement should dictate where the money goes if the transaction fails.
Norcal Capital Group, Inc can walk you through the pitfalls of getting a mortgage. Give us a call at (650) 689-5684.