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 says "yes" and the loan is approved. There are still a few major hurdles to jump before the keys are handed over. We have listed some things below we suggest you stay away from when waiting for your loan to close.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, electronics, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Because lending institutions are perusing your financial accounts, a large cash purchase is also a bad idea.

Don't go job hunting. Stability in your career history is a good thing to lenders. 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 approval, your process could fail or be stalled.

Don't move money around or switch banks. Bank statements from recent months for your accounts (savings, checking, money market, and other assets) will be studied as the lender makes decisions regarding your application. In order to eliminate fraud, lenders require a clear and consistent picture of how you earn your living and where any additional funds come from. No matter the reason, switching banks or moving funds from one account to another can raise a red flag with the lender and slow down your qualification process.

Don't give cash directly to your seller (commonly in the case of of "for sale by owner") to be considered earnest money. As a rule, your good faith deposit belongs to you, not the seller until closing. The earnest money is to go toward your expenses upon closing; some sellers might not realize this. Find a lawyer or other neutral party who is able to hang on to the funds or place them in a trust account until closing. The disposition of good faith funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.