Things to Avoid While Purchasing a Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the lender approves their loan. There are still a few major hurdles to jump before the house is really yours. We have listed some actions below you will want to stay away from when waiting for your loan to close.

Don't overspend on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until closing. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy big-ticket items can also be an issue: many lending institutions take into consideration your cash reserve when approving your application.

Don't get a new career. Lending Institutions look for a consistent job history on your paperwork. Getting a new career before you apply for a loan may not compromise your approval at all. But for some people, changing careers during the mortgage approval process may raise concern and affect your application.

Don't move cash around or switch banks. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and others) will be studied as the lending institution considers your application. Your lender looks for a steady flow of your funds each pay period, in order to avoid fraud. No matter the reason, switching banks or transferring funds can raise a red flag with the lender and slow down your approval process.

Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until the transaction is final. Any earnest funds are to be used for your expenses upon closing; some FSBO sellers may not realize this. An attorney or other type of neutral party can hold onto your funds, or you may put them temporarily into a trust account until closing. The purchase contract should dictate who gets the money if the transaction fails.