What to Avoid During a Home Purchase
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before closing could be trouble. There are still a few major hurdles to jump before your loan closes. Here are some things to stay clear of during the home buying process to be sure the transaction goes well.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to buy big items can also be an issue: most banks look at your cash on hand when approving your application.
Don't go on a job search. Stability in your work history is a good thing to lenders. Finding a new career (particularly one with a better salary) may not jeopardize your ability to qualify for your loan. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.
Don't change banks or move finances around in your bank accounts. Bank statements from recent months for all of your accounts (savings, checking, money market, and other accounts) will probably be reviewed as the lender makes decisions regarding your mortgage application. To eliminate potential fraud, most lending institutions need detailed paperwork to verify the source of all incoming funds. No matter the reason, changing banks or moving funds from one account to another can raise a red flag with the lender and slow your approval process.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. Your good faith money does not belong to the seller: it is actually yours until closing. A FSBO seller might not know that your good faith money should go toward your expenses at closing. Get an attorney or other neutral person who will hold the money or put it in a trust account until closing. The purchase contract should indicate where the deposit goes if the transaction fails.
Riviera Funding NMLS#861382 CA DRE Broker #01186669 can answer questions about these "Don'ts" and many others. Call us at 3103737406.