Things to Avoid While Purchasing a Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves their loan. Keep in mind that until you get the keys, your lender is watching you very closely. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Using plastic to buy furniture could compromise your lending process by distorting your numbers. Using cash to purchase big-ticket items can also be a problem: many lending institutions take into consideration your cash on hand when approving your loan.
Don't go on a career search. Lending Institutions look for a consistent work history on your application. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. But for some, switching jobs during the mortgage loan approval process may bring concern and hinder your application.
Don't move finances around or change banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and others) will likely be reviewed as the lender makes decisions regarding your mortgage application. To avoid potential fraud, most lenders require detailed paperwork to determine the source of all incoming funds. Changing banks or transferring funds elsewhere - for whatever reason - may make it difficult for your lender to document your funds.
Don't give money directly to your seller (commonly in the case of of "for sale by owner") for a "good faith" deposit. Until closing, the good faith money actually belongs to you. Any good faith funds are to be used for your expenses closing; a individual seller might not realize this. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. If your transaction fails, your contract with the seller should dictate where the earnest money should go.
Norcal Capital Group, Inc can answer questions about these "Don'ts" and many others. Call us at (650) 689-5684.