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. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. We have given you a list of things below you will want to stay away from when waiting for closing.
Don't overspend on big-ticket items It may be tempting to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to stay away from making big ticket buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your lender may send up red flags if you buy new electronics on your credit cards during your loan process. Because lenders are examining your bank accounts, a large cash purchase is also not advised.
Don't look for a new job. Your recent work history should show stability. Getting a new career before you apply for a loan may not jeopardize your approval at all. But for some, getting a new career during the loan approval process could bring concern and affect your application.
Don't switch banks or move finances around in your bank accounts. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and others) will likely be analyzed as the lender makes decisions regarding your approval. To eliminate fraud, lenders need a consistent portrayal of how you earn your money and where additional money comes from. Switching banks or moving finances elsewhere - no matter the reason - could make it difficult for your lender to review your funds.
Don't give cash directly to your seller (usually in cases of "for sale by owner") to be considered earnest money. Until the completion of the deal, any earnest money remains yours. Some FSBO sellers might not know that your earnest money should be applied to your expenses at closing. Get a lawyer or other neutral party who is able to hold the funds or put them in a trust account until you close. The final disposition of earnest funds, if your home purchase falls through, should be written in the contract with your seller.
At Riviera Funding NMLS#861382 CA DRE Broker #01186669, we answer questions about this process every day. Call us: 3103737406.