What to Avoid During a Home Purchase

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some actions to avoid during the home buying process to be sure your transaction goes well.

Don't throw your money around. Although you will be listing ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using plastic to buy new living room furniture could jeopardize your loan process by distorting your numbers. Using cash to purchase expensive items can even create a mistake: most banks take into consideration your available cash when approving your application.

Don't look for a new job. Lenders look for a consistent job history on your paperwork. Finding a new career (especially one with a bump in salary) may not hinder your ability to qualify for a loan. However, finding a new job during the approval process might affect whether or not you are approved.

Don't move money around or switch banks. Your lender will ask for recent bank statements for all of your accounts: savings, checking, money market, and other liquid assets. To eliminate potential fraud, most loans want detailed paperwork to document the source of all cash. Switching banks or transferring money elsewhere - even if its only to consolidate funds - could make it harder for the lender to verify your funds.

Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although your seller might not know this, the good faith money must be used for the buyer's closing expenses. A neutral party, like an attorney can hold onto your earnest funds, or you may place them temporarily into a trust account until you close. Should your home purchase fail, the 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. Give us a call at 6507631924.