What to Avoid During your Home Purchase

What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But making big purchases before closing could be trouble. There still remain a few major hurdles to jump before the house is realy yours. Here are some things to stay clear of during the home buying process to be sure the transaction goes smoothly.

Don't make expensive purchases. Although you will be listing ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Financing new bedroom 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 purchase expensive items can even create a problem: most banks take into consideration your cash reserve when approving your mortgage.

Don't look for a new job. Stability in your job history is a positive thing to lenders. Getting a new job before you start the application process for a mortgage may not affect your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be slowed down.

Don't move cash around or switch banks. Bank statements from the last few months for your accounts (savings, checking, money market, and other assets) will probably be studied as the lending institution makes decisions regarding your loan application. The lender looks for a steady rise and fall of your funds over the month, in the interest of avoiding fraud. No matter the purpose, changing banks or moving money from one account to another may raise a red flag with the lender and impede your loan process.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your good faith deposit does not belong to the seller: it is actually yours until closing. The earnest funds are to go toward your expenses upon closing; some FSBO sellers may not realize this. It's advisable to put the money into a trust account, or get an attorney to hold it until the closing of the sale. The disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.

Riviera Funding NMLS#861382 CA DRE Broker #01186669 can answer questions about these "Don'ts" and many others. Give us a call at 3103737406.