Things to Avoid While Purchasing 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 taking their enthusiasm straight to the mall or furniture store. Keep in mind that until closing, your lender is watching your finances very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't throw your money around. You may be itching to buy that new couch for the soon-to-be-yours parlor, but it's best to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until closing. Using plastic to buy furniture could compromise your loan process by distorting your numbers. Using cash to buy big items can also be an issue: most lenders take into consideration your available cash when approving your mortgage loan.
Don't get a new career. Lending Institutions feel comfortable seeing a consistent career history on your paperwork. Changing jobs may not affect your ability to qualify for a loan - particularly if you are getting a better salary. But for some, changing careers during the mortgage loan application process may bring concern and affect your approval.
Don't take your accounts to a new bank or move around your finances. While the lender considers your mortgage loan application, you will probably be required to produce bank statements for the last two or three months for your checking and savings accounts, money market accounts and other liquid finances. Your lending institution looks for a consistent rise and fall of your funds each month, in order to avoid fraud. Even for innocent reasons, transferring funds or changing banks may make it harder for your lending institution to document your bank history.
Don't give money directly to your seller (usually in the case of of "for sale by owner") to be used as earnest money. As a rule, your good faith deposit belongs to you, not the seller until the sale is final. Any good faith funds are to be used for your expenses closing; some sellers might not realize this. A neutral party, like an attorney can hold your earnest funds, or you may put them temporarily into a trust account until you close. The contract should specify who gets the deposit 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.