What to Avoid During your Home Purchase

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until the keys are handed over, there are still some hoops to jump through. Here are some actions to stay clear of before closing to assure your transaction goes smoothly.

Don't buy big-ticket items. Although you will be planning ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. It's also a red flag to make those big-ticket purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.

Don't get a new career. Stability in your work history is a good thing to lending institutions. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are getting a bigger paycheck. But for some, switching jobs during the mortgage approval process could bring concern and hinder your approval.

Don't switch banks or move cash around in your bank accounts. Your lender will require you to submit recent bank statements on your accounts: checking, savings, money market, and other assets. The lender is looking for a steady flow of your funds each month, in the interest of ruling out fraud. Even for innocent purposes, transferring cash or changing banks could make it more difficult for your lending institution to document your bank history.

Don't give funds directly to your seller (commonly in cases of "for sale by owner") for a "good faith" deposit. Until the sale is complete, the good faith deposit actually belongs to you. Your FSBO seller may not realize that any good faith funds must go toward your expenses upon closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. The disposition of good faith funds, if your sale falls through, should be specified in the contract with the seller.

Norcal Capital Group, Inc can answer questions about these "Don'ts" and many others. Give us a call: 6507631924.