Things to Avoid While Buying a Home

Lots of 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 are still a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to purchase big-ticket items can even create an issue: most lending institutions look at your available cash when approving your loan.

Don't get a new career. Lenders like to see a consistent job history on your application. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are going to be making more money. But for some people, getting a new career during the mortgage approval process may bring concern and hinder your approval.

Don't switch banks or move money around in your accounts. While the lending institution considers your mortgage application, you will likely be instructed to produce bank statements for the last few months on your saving and checking accounts, money market funds and other liquid assets. To eliminate potential fraud, most lending institutions want a thorough paper trail to document the source of all incoming funds. Even for practical reasons, transferring finances or switching banks might make it difficult for your lender to document your account history.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith deposit is yours, not the seller's up until the sale is final. Some FSBO sellers might not know that any good faith money is to be applied to your expenses at closing. You'll need to put the deposit into a trust account, or get an attorney to hold it until closing. The final disposition of earnest funds, in the case of a failed transaction, should be documented in the contract with your seller.