Things to Avoid While Buying a Home

Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. There still remains a few major hurdles to jump before your loan closes. Here are some things to avoid during the home buying process to be sure your transaction goes smoothly.

Don't empty your wallet on big-ticket items Although you will be dreaming of ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and vehicle purchases until your loan closes. Using plastic to buy furniture could compromise your lending process by distorting your numbers. It's also a mistake to make those big-ticket purchases using cash. Lending Institutions are examining your cash reserve when considering your loan.

Don't look for a new job. Lenders look for a consistent work history on your application. Getting a new job may not affect your ability to qualify for a loan - particularly if you are going to be making more money. However, switching jobs in the middle of your approval process might influence whether or not you are approved.

Don't take your accounts to a new bank or move around your finances. While the lender reviews your mortgage loan application, you will probably be instructed to submit bank statements for the last two or three months on your checking accounts, savings accounts, money market accounts and other liquid finances. To avoid fraud, lenders will need clear documentation of how you earn your money and where any additional wealth comes from. Switching banks or moving money elsewhere - for whatever reason - might hinder the documentation of your accounts.

Don't give funds directly to your seller (generally in cases of "for sale by owner") for earnest money. Until the completion of the deal, any good faith deposit actually belongs to you. Some FSBO sellers may not realize that these good faith funds are to go toward your expenses upon closing. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. Your contract should specify where the money goes if the transaction does not go through.