Don't Trip Yourself up While Buying a Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. Until your loan closes, there are still some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't empty your wallet on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Financing new Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to purchase big-ticket items can even be a mistake: most banks look at your cash on hand when approving your mortgage loan.

Don't get a new career. Lending Institutions like to see a consistent work history on your application. Finding a new job (especially one with a bigger paycheck) may not jeopardize your ability to qualify for a loan. However, if you switch careers before approval, your process could fail or be stalled.

Don't move finances around or change banks. Bank statements from the last two or three months for all of your accounts (checking, savings, money market, and other assets) will probably be reviewed as the lender makes decisions regarding your application. Your lending institution looks for a steady flow of your funds each month, in the interest of ruling out fraud. No matter the purpose, switching banks or transferring money might raise a red flag with your lender and slow your approval process.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Although some individual sellers might not understand this, the good faith money should be used for your closing expenses. You'll need to put the funds into a trust account, or get an attorney to hold them until the closing of the sale. Should your sale fall through, the purchase contract should specify where your good faith funds should go.

At Riviera Funding NMLS#861382 CA DRE Broker #01186669, we answer questions about this process every day. Call us: 3103737406.