Don't Trip Yourself up While Buying your New Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. There still remain a few major hurdles to jump before your loan closes. Here are some actions to refrain from during the home buying process to be sure the transaction goes smoothly.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and vehicle purchases until your loan closes. Using credit cards to buy new living room furniture could jeopardize your loan process by distorting your numbers. Using cash to buy expensive items can also be a mistake: most lenders take into consideration your available cash when approving your loan.
Don't get a new job. Stability in your career history is a good thing to lenders. Getting a new job before you start the application process for a mortgage may not jeopardize your approval at all. 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 money. Your lending institution will require you to submit recent bank statements on accounts in your name: savings, checking, money market, and other assets. To eliminate potential fraud, most lending institutions require a thorough paper trail to verify the source of all incoming funds. No matter the purpose, changing banks or transferring money might raise a red flag with the lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith deposit belongs to you, not the seller up until closing. Your good faith money is to go toward your expenses closing; some sellers might not understand this. Get a lawyer or other neutral person who will hold the funds or put them in a trust account until closing. The final disposition of good faith funds, if your sale falls through, should be specified in the contract with the seller.
At Riviera Funding, we answer questions about this process every day. Give us a call at (310) 373-7406.