What to Avoid During your 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 their loan. There still remain a few major hurdles to jump before closing. We have listed some actions below we suggest you stay away from when waiting for closing.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. Using cash to buy big items can also create a problem: most lending institutions consider your cash reserve when approving your application.
Don't go on a job search. Stability in your job history is a good thing to lenders. Getting a new job before you start the application process for a mortgage may not compromise your approval at all. But in some cases, getting a new career during the mortgage approval process may raise concern and hinder your application.
Don't change banks or move finances around in your accounts. Bank statements from the last two or three months for your accounts (savings, checking, money market, and others) will probably be analyzed as the lender makes decisions regarding your approval. In order to eliminate fraud, lenders will need a consistent portrayal of how you earn your money and where additional wealth comes from. No matter the reason, moving banks or transferring funds could raise a red flag with your lender and impede your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until the completion of the deal, the good faith deposit remains yours. Although some FSBO sellers may not understand this, your good faith funds must be used for the buyer's closing expenses. Get a lawyer or other neutral party who can hang on to the money or put it in a trust account until closing. The purchase contract should dictate where the funds go if the home purchase fails.
At Riviera Funding NMLS#861382 CA DRE Broker #01186669, we answer questions about this process every day. Call us at 3103737406.