Don't Trip Yourself up While Buying a New Home

Some 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. Keep in mind that until you get the keys, your lender is watching your accounts very closely. We have listed some things below we suggest you avoid when waiting for your loan to close.

Don't overspend on big-ticket items Although you will be planning ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until the closing of your loan. Your lender may send up red flags if you purchase your furniture on your credit cards in the middle of your loan process. Using cash to buy big-ticket items can even create a mistake: many lending institutions take into consideration your available cash when approving your loan.

Don't go on a career search. Lenders feel comfortable seeing a consistent work history on your application. Finding a new career (especially one with a bigger paycheck) may not change your ability to qualify for a mortgage loan. But for some, changing jobs during the mortgage loan approval process could bring concern and hinder your approval.

Don't move money around or switch banks. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and others) will be analyzed as the lending institution makes decisions regarding your application. To avoid potential fraud, most loans want detailed paperwork to determine the source of all cash. Changing banks or transferring money elsewhere - no matter the purpose - might hinder the documentation of your accounts.

Don't give cash directly to your seller (usually in the case of of "for sale by owner") to be considered earnest money. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Although your FSBO seller might not know this, any good faith money should go toward your closing expenses. Find an attorney or other neutral party who is able to hold the deposit or place it in a trust account until closing. The final disposition of earnest money, if your sale fails, should be specified in the contract with the seller.

Norcal Capital Group, Inc can walk you through the pitfalls of getting a mortgage. Give us a call at 6507631924.