What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves the loan. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's also a mistake to make those big purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a job search. Your recent job history should show consistency. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are getting a better salary. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't move cash around or switch banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will probably be reviewed as the lender makes decisions regarding your loan application. Your lender is looking for a consistent flow of your funds over the month, in the interest of avoiding fraud. Switching banks or moving money elsewhere - even if its merely to pool funds - may make it harder for your lender to verify your funds.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be considered a "good faith" deposit. Your good faith money does not belong to the seller: it is actually yours until closing. Some FSBO sellers may not realize that your good faith funds must go toward your expenses upon closing. A neutral party, like an attorney can hang onto your earnest funds, or you may put them temporarily into a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
Riviera Funding can walk you through the pitfalls of getting a mortgage. Call us: (310) 373-7406.