Don't Trip Yourself up While Buying your Home

Some 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 their loan. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of things to avoid during this critical time of your home purchase.

Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Since lenders are looking closely at your financial accounts, a large cash purchase is also not advised.

Don't get a new job. Lending Institutions feel comfortable seeing a consistent job history on your paperwork. Finding a new job (particularly one with a bigger paycheck) may not affect your ability to qualify for a mortgage. But for some people, changing careers during the loan approval process could bring concern and hinder your application.

Don't switch your accounts to a new bank or move around your money. Bank statements from recent months for accounts in your name (checking, savings, money market, and other assets) will be analyzed as the lending institution makes decisions regarding your loan application. The lending institution is looking for a steady flow of your funds over the month, in the interest of avoiding fraud. Switching banks or transferring money to another account - even if its just to pool funds - may hinder the documentation of your funds.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit is yours, not the seller's until closing. Some FSBO sellers may not realize that any earnest money must be applied to your expenses at closing. A neutral party, like an attorney can hold your earnest money, or you may put it temporarily into a trust account until you close. The disposition of good faith funds, if your transaction fails, should be documented in the contract with your seller.