What to Avoid During your Home Purchase
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 closing can be a mistake. It's best to remember that until you get the keys, your lender is watching your accounts very closely. Here are some things to avoid during the home buying process to be sure the transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, jewelry, appliances, or vacations until the loan closes. Using plastic to buy furniture could jeopardize your lending process by distorting your numbers. Using cash to buy expensive items can also be a mistake: most lending institutions look at your cash on hand when approving your mortgage.
Don't look for a new career. Lending Institutions feel comfortable seeing a consistent work history on your application. Getting a new job before you apply for a loan may not affect your approval at all. However, if you switch careers before approval, your loan process could fail or be bogged down.
Don't switch your accounts to a new bank or move around your money. Your lender will instruct the submission of recent bank statements for all of your accounts: savings, checking, money market, and other liquid assets. Your lender looks for a steady flow of your money each month, in the interest of avoiding fraud. Changing banks or moving money elsewhere - even if its just to pool funds - might make it difficult for the lender to verify your funds.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Although your FSBO seller may not realize this, the good faith money must be applied to the buyer's closing expenses. You'll need to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until closing. The final disposition of earnest money, if your transaction falls through, should be documented in the purchase agreement with your seller.
Norcal Capital Group, Inc can walk you through the pitfalls of getting a mortgage. Call us at 6507631924.