Don't Trip Yourself up While Buying your New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy 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 keep away from vacations and vehicle purchases until your loan closes. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to buy big-ticket items can also create a bad idea: most banks consider your cash on hand when approving your loan.
Don't go on a job search. Consistency in your career history is a positive thing to banks and other lenders. Getting a new job may not affect your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't switch your accounts to a new bank or move around your finances. As the lender reviews your mortgage loan package, you will probably be instructed to submit bank statements for the last two or three months for your saving and checking accounts, money market funds and other liquid wealth. Your lender looks for a consistent rise and fall of your money each month, in order to avoid fraud. Changing banks or transferring finances elsewhere - for whatever purpose - may hinder the review of your accounts.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith deposit remains yours. Your seller may not know that this good faith money 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 closing. The disposition of earnest funds, if your sale falls through, should be included in the purchase agreement with the seller.
At Riviera Funding, we answer questions about this process every day. Call us: (310) 373-7406.