Things to Avoid While Buying a Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. It's wise to remember that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.

Don't overspend on big-ticket items You may be itching to order that new Turkish rug for the soon-to-be-yours living room, but it's advisable to avoid making big ticket buys like furniture, appliances, jewelry, or cars until closing. Using credit cards to buy new living room furniture could compromise your loan process by distorting your numbers. Using cash to purchase big items can also create an issue: many lenders consider your cash on hand when approving your mortgage.

Don't look for a new career. Lenders like to see a consistent job history on your paperwork. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are going to be making more money. But in some cases, changing jobs during the mortgage loan approval process might raise concern and stymie your approval.

Don't change banks or move money around in your accounts. Bank statements from recent months for all of your accounts (savings, checking, money market, and other assets) will likely be analyzed as the lending institution makes decisions regarding your mortgage application. To avoid potential fraud, most loans want a thorough paper trail to determine the source of all incoming funds. No matter the purpose, moving banks or moving funds from one account to another could raise a red flag with your lender and impede your application process.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's until closing. Some FSBO sellers may not know that the good faith money should be applied to your expenses upon closing. Find a lawyer or other neutral party who is able to hang on to the deposit or put it in a trust account until you close. If your home purchase fails, your purchase contract should indicate to whom this earnest money should go.