What to Avoid During your Home Purchase

Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Until the keys are handed over, there are still some hurdles to jump. Here are some actions to stay clear of before closing to be sure your transaction goes smoothly.

Don't empty your wallet on big-ticket items You may be tempted to order that new sofa for the soon-to-be-yours den, but it's best to avoid making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. You may send up red flags with your lender if you buy new furniture on your credit cards in the middle of your loan process. Using cash to buy expensive items can even be a bad idea: many lenders take into consideration your cash reserve when approving your mortgage loan.

Don't look for a new career. Lenders feel comfortable seeing a consistent career history on your application. Getting a new job may not compromise your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, if you switch careers before approval, your mortgage process could fail or be stalled.

Don't switch your accounts to a new bank or move around your cash. Bank statements from recent months for your accounts (checking, savings, money market, and other accounts) will probably be studied as the lender makes decisions regarding your mortgage application. To detect fraud, lenders will need a clear and consistent picture of how you earn your living and where additional money comes from. No matter the purpose, moving banks or moving funds from one account to another could raise a red flag with the lender and slow your application process.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith money does not belong to the seller: it is actually yours until the sale closes. The earnest funds are to be applied to your expenses upon closing; some individual sellers might not understand this. You'll need to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. The disposition of good faith funds, in the case of a failed transaction, should be written in the purchase agreement with the seller.

Riviera Funding NMLS#861382 CA DRE Broker #01186669 can walk you through the pitfalls of getting a mortgage. Give us a call at 3103737406.