Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves the loan. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's also a bad idea to make those large purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't go on a career search. Your recent career history should show consistency. Getting a new job may not affect your ability to qualify for a loan - particularly if you are improving your salary. But in some cases, getting a new career during the mortgage loan approval process may bring concern and hinder your application.
Don't switch banks or move money around in your bank accounts. While your lender reviews your loan application, you will probably be required to produce bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid finances. In order to eliminate fraud, lenders want to see clear documentation of how you earn your money and where any additional wealth comes from. Switching banks or moving finances elsewhere - even if its only to consolidate funds - may hinder the review of your accounts.
Don't give money directly to your seller (commonly in cases of "for sale by owner") for earnest money. Until closing, any good faith deposit remains yours. Your seller may not know that any good faith money should be used for your expenses upon closing. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until you close. The purchase agreement should specify who keeps the deposit if the transaction does not go through.
At Norcal Capital Group, Inc, we answer questions about this process every day. Give us a call at (650) 689-5684.