What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. Until closing, there are still some hurdles to jump. We have given you a list of things below we suggest you stay away from when waiting for closing.
Don't buy big-ticket items. It may be tempting to order that new easy-chair for the soon-to-be-yours living room, but it's advisable to stay away from making major purchases like furniture, appliances, electronic equipment, or vacations until closing. Your lender may send up red flags if you purchase new electronics on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also create a bad idea: many lending institutions consider your cash on hand when approving your mortgage.
Don't get a new job. Lending Institutions feel comfortable seeing a consistent job history on your paperwork. Changing jobs may not compromise your ability to qualify for a loan - especially if you are getting a better salary. But for some, changing jobs during the mortgage application process could raise concern and hinder your approval.
Don't move money around or switch banks. As your lending institution reviews your mortgage application, you will likely be required to provide bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid wealth. Your lending institution will need to see a steady rise and fall of your money over the month, in order to avoid fraud. No matter the purpose, changing banks or moving money from one account to another could raise a red flag with the lender and impede your qualification process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller until the deal closes. Although some individual sellers may not realize this, the good faith funds must be used for your closing expenses. Get an attorney or other neutral person who will hold the money or put it in a trust account until you close. The contract should dictate to whom the funds go if the transaction fails.
Norcal Capital Group, Inc can walk you through the pitfalls of getting a mortgage. Call us at (650) 689-5684.