Don't Trip Yourself up While Buying your Home

What's better than buying a bunch of new furniture to adorn your future home? Nothing. But making large purchases before your loan closes can be harmful. There still remain a few major hurdles to jump before the house is realy yours. Here are some things to avoid during the home buying process to be sure the transaction goes well.

Don't make expensive purchases. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by altering your numbers dramatically. Using cash to purchase big items can even create a mistake: many lenders take into consideration your available cash when approving your application.

Don't go on a job search. Your recent work history should show stability. Finding a new job (particularly one with a bump in salary) may not affect your ability to qualify for a mortgage. But in some cases, changing careers during the loan application process may bring concern and affect your approval.

Don't take your accounts to a new bank or move around your money. As the lending institution considers your loan package, you will likely be instructed to provide bank statements for the last few months on your saving and checking accounts, money market funds and other liquid finances. To eliminate potential fraud, most loans want thorough paperwork to document the source of all funds. Switching banks or transferring funds elsewhere - even if its just to pool funds - may make it difficult for the lender to document your funds.

Don't give funds directly to your seller (generally in the case of of "for sale by owner") for a "good faith" deposit. As a rule, your good faith money is yours, not the seller's up until the deal closes. Some sellers might not know that the good faith money must go toward your expenses at closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. Your purchase contract 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 6507631924.