What to Avoid During your Home Purchase
What's better than getting a bunch of new furnishings to go in your future home? Not much. But buying big ticket items before your loan closes can be harmful. It's wise to remember that until closing, your lender is watching you very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Because lenders are reviewing your bank accounts, a large cash purchase is also not advised.
Don't go on a career search. Stability in your job history is a good thing to banks and other lenders. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't move money around or change banks. While your lending institution considers your loan package, you will probably be instructed to submit bank statements for the last two or three months on your checking and savings accounts, money market funds and other liquid finances. To eliminate potential fraud, most lenders need detailed paperwork to determine the source of all incoming funds. Even for practical reasons, transferring money or switching banks could make it difficult for your lender to document your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Your seller might not realize that the good faith money should go toward your expenses upon closing. A neutral party, like an attorney can hold your funds, or you may place them temporarily into a trust account until closing. Your contract should dictate who keeps the deposit if the transaction does not go through.
Riviera Funding can walk you through the pitfalls of getting a mortgage. Give us a call at (310) 373-7406.