Don't Trip Yourself up While Buying a Home

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of actions to avoid during this crucial time of your home purchase.

Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and car purchases until your loan closes. Your lender may send up red flags if you buy new appliances on your credit cards during your loan process. Because lenders are looking closely at your financial accounts, a large cash purchase is also a mistake.

Don't go on a job search. Consistency in your work history is a positive thing to banks and other lenders. Finding a new job (especially one with a better paycheck) may not change your ability to qualify for a mortgage. However, switching jobs in the middle of your approval process may affect whether or not you are approved.

Don't switch banks or move cash around in your accounts. Bank statements from the last few months for your accounts (savings, checking, money market, and others) will be analyzed as the lender makes decisions regarding your mortgage application. To detect fraud, lenders will need clear documentation of how you earn your money and where any additional funds come from. No matter the reason, switching banks or transferring funds can raise a red flag with the lender and slow your loan process.

Don't give cash directly to your seller (commonly in cases of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Some FSBO sellers may not know that any earnest money is to be applied to your expenses at closing. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The disposition of good faith funds, if your sale falls through, should be indicated in the contract with the seller.

Norcal Capital Group, Inc can answer questions about these "Don'ts" and many others. Call us at 6507631924.