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 mistake of taking their enthusiasm straight to the mall or appliance store. It's wise to remember that until closing, your lender is watching you very closely. Here are some things to avoid before closing to be sure the transaction goes well.

Don't overspend on big-ticket items Although you may be planning ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and vehicle purchases until your loan closes. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's also a mistake to make those huge purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.

Don't go on a job search. Your recent work history should show consistency. Getting a new career before you apply for a mortgage loan may not affect your approval at all. But for some people, changing jobs during the loan approval process could raise concern and stymie your application.

Don't switch your accounts to a new bank or move around your cash. Your lending institution will ask for recent bank statements of your accounts: savings, checking, money market, and other liquid assets. To detect potential fraud, most lenders require a thorough paper trail to determine the source of all incoming funds. Even for innocent purposes, transferring cash or changing banks may make it more difficult for the lender to verify your account history.

Don't give cash directly to your seller (usually in the case of of "for sale by owner") to be used as a "good faith" deposit. Until closing, the good faith money actually belongs to you. Some FSBO sellers may not realize that this good faith money must be applied to your expenses at closing. Get a lawyer or other neutral party who will hang on to the funds or put them in a trust account until closing. The final disposition of good faith funds, if your home purchase falls through, should be documented in the purchase agreement with your seller.

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