Things to Avoid While Purchasing a Home

Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the loan is approved. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Here are some things to avoid before closing to be sure the transaction goes well.

Don't throw your money around. You may be tempted to order that new sofa for the soon-to-be-yours parlor, but it's best to avoid making large buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. It's even a bad idea to make those large purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.

Don't get a new career. Lenders look for a consistent job history on your paperwork. Finding a new career (especially one with a bump in salary) may not jeopardize your ability to qualify for your mortgage loan. However, if you switch careers before you qualify, your process could fail or be bogged down.

Don't move finances around or switch banks. Your lender will require you to produce recent bank statements for accounts in your name: checking, savings, money market, and other assets. To detect potential fraud, most lenders need a thorough paper trail to document the source of all funds. Changing banks or moving money elsewhere - for whatever purpose - could make it difficult for the lender to review your funds.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith money belongs to you, not to the seller up until the sale is final. Your good faith funds are to be used for your expenses upon closing; some sellers may not know this. Get a lawyer or other neutral party who can hold the funds or place them in a trust account until closing. Should your home purchase fail, the purchase agreement should dictate to whom the good faith deposit should go.