Things to Avoid While Purchasing a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. Until your keys are in hand, there still remain some hoops to jump through. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items You may be tempted to order that new sofa for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Using plastic to buy new living room furniture could jeopardize your loan process by altering your numbers dramatically. Using cash to buy big-ticket items can also be an issue: many lending institutions take into consideration your cash on hand when approving your loan.
Don't look for a new career. Your recent career history should show consistency. Finding a new career (particularly one with a better paycheck) may not jeopardize your ability to qualify for a mortgage. However, switching jobs during your approval process might affect whether or not you are approved.
Don't take your accounts to a new bank or move around your cash. As your lending institution reviews your mortgage loan package, you will likely be asked to submit bank statements for the last two or three months on your checking accounts, savings accounts, money market accounts and other liquid wealth. To avoid fraud, lenders look for a clear and consistent picture of how you earn your living and where any additional wealth comes from. No matter the reason, moving banks or moving funds from one account to another may raise a red flag with the lender and slow down your qualification process.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith deposit remains yours. Any earnest funds are to be applied to your expenses upon closing; some individual sellers might not understand this. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until closing. The contract should dictate who gets the earnest funds if the home purchase does not go through.
Norcal Capital Group, Inc can answer questions about these "Don'ts" and many others. Call us: (650) 689-5684.