Don't Trip Yourself up While Buying a Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Until closing, there still remain some hoops to jump through. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't buy luxury items. It may be tempting to order that new easy-chair for the soon-to-be-yours living room, but it's advisable to avoid making major purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. You may send up red flags with your lender if you buy new appliances on your credit cards in the middle of your loan process. Using cash to buy big items can even create a problem: many lending institutions consider your available cash when approving your mortgage loan.
Don't look for a new career. Stability in your work history is a good thing to banks and other lenders. Finding a new job (particularly one with a bigger paycheck) may not change your ability to qualify for your mortgage loan. However, finding a new career during the approval process may affect your approval.
Don't take your accounts to a new bank or move around your money. Bank statements from the last few months for accounts in your name (savings, checking, money market, and others) will likely be analyzed as the lending institution considers your loan application. Your lender is looking for a steady flow of your money over the month, in order to rule out fraud. Changing banks or moving finances elsewhere - no matter the reason - might hinder the review of your accounts.
Don't give cash directly to your seller (usually in cases of "for sale by owner") for a "good faith" deposit. Until the completion of the deal, any good faith money remains yours. Although some FSBO sellers may not realize this, the good faith money should go toward the buyer's closing expenses. An attorney or other type of neutral party can hold onto your earnest funds, or you may place them temporarily into a trust account until you close. The final disposition of earnest money, if your sale falls through, should be written in the contract with your seller.
Riviera Funding can answer questions about these "Don'ts" and many others. Give us a call at (310) 373-7406.