What to Avoid During your Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. It's wise to remember that until closing, your lender is watching your finances very closely. Here are some things to stay clear of before closing to be sure the transaction goes well.

Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Your credit numbers could change suddenly if you make a huge purchase using plastic. Using cash to purchase expensive items can even be a bad idea: most lending institutions take into consideration your cash on hand when approving your loan.

Don't look for a new job. Lending Institutions look for a consistent career history on your paperwork. Getting a new job before you apply for a mortgage loan may not get in the way of your approval at all. But in some cases, switching jobs during the mortgage loan application process might bring concern and hinder your approval.

Don't change banks or move cash around in your bank accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will likely be studied as the lending institution considers your approval. To avoid potential fraud, most lenders want a thorough paper trail to determine the source of all cash. Even for innocent reasons, moving around cash or changing banks could make it harder for your lending institution to verify your bank history.

Don't give money directly to your seller (usually in the case of of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller may not know this, any good faith money must go toward your closing expenses. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the closing of the sale. The disposition of earnest funds, in the case of a failed transaction, should be written in the purchase agreement with your seller.

At Norcal Capital Group, Inc, we answer questions about this process every day. Give us a call: 6507631924.

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Norcal Capital Group, Inc

1369 El Camino Real
Millbrae, CA 94030