Things to Avoid While Buying a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't throw your money around. Although you may be planning ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Your credit numbers could change suddenly if you purchase new furniture using plastic. Using cash to purchase expensive items can even be a mistake: most banks consider your cash on hand when approving your mortgage.
Don't look for a new career. Consistency in your career history is a good thing to banks and other lenders. Getting a new job before you apply for a mortgage loan may not compromise your approval at all. However, if you switch careers before you qualify, your loan process could fail or be slowed down.
Don't change banks or move money around in your bank accounts. Bank statements from recent months for your accounts (savings, checking, money market, and other assets) will probably be reviewed as the lending institution makes decisions regarding your application. To detect potential fraud, most lending institutions want a detailed paper trail to verify the source of all cash. Even for innocent reasons, transferring finances or changing banks might make it more difficult for the lending institution to verify your account history.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller up until closing. Any earnest money is to go toward your expenses upon closing; some sellers may not know this. We recommend that you put the money into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. If your home purchase fails, the purchase contract should specify where the earnest money should go.
Riviera Funding can answer questions about these "Don'ts" and many others. Give us a call at (310) 373-7406.