What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves the loan. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't overspend on big-ticket items Although you may be listing ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until your loan closes. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a mistake to make those big-ticket purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a job search. Lenders like to see a consistent work history on your application forms. Finding a new career (especially one with a bump in salary) may not hinder your ability to qualify for your loan. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.
Don't take your accounts to a new bank or move around your money. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will be reviewed as the lending institution makes decisions regarding your loan application. Your lender looks for a steady flow of your money each month, in the interest of avoiding fraud. No matter the reason, switching banks or moving money from one account to another could raise a red flag with the lender and slow down your loan process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any earnest money actually belongs to you. Although some FSBO sellers might not know this, the earnest money should be applied to the buyer's closing expenses. Find a lawyer or other neutral person who can hold the funds or put them in a trust account until closing. If your sale falls through, your purchase agreement should indicate to whom this good faith funds should go.
At Norcal Capital Group, Inc, we answer questions about this process every day. Call us: 6507631924.