What to Avoid During your Home Purchase

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Until your loan closes, there are still some hurdles to jump. Here are some things to refrain from during the home buying process to be sure the transaction goes well.

Don't empty your wallet on big-ticket items It may be tempting to order that new Turkish rug for the soon-to-be-yours den, but it's best to stay away from making big ticket purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Using credit cards to buy furniture could compromise your loan process by altering your numbers dramatically. Since lenders are looking closely at your financial accounts, a large cash purchase is also a mistake.

Don't look for a new job. Your recent job history should show consistency. Finding a new career (especially one with a better salary) may not jeopardize your ability to qualify for a loan. But for some, switching jobs during the mortgage loan application process could bring concern and affect your approval.

Don't take your accounts to a new bank or move around your money. Your lending institution will instruct the submission of recent bank statements for all of your accounts: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most loans require thorough paperwork to verify the source of all funds. Even for practical purposes, moving around funds or switching banks might make it difficult for your lender to confirm your account history.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith deposit actually belongs to you. Any good faith funds are to go toward your expenses upon closing; some sellers might not realize this. Get an attorney or other neutral party who is able to hold the funds or put them in a trust account until closing. The final disposition of earnest money, if your sale fails, should be documented in the purchase agreement with your seller.