Things to Avoid While Purchasing a Home

With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before the house is really yours. Here are some actions to stay clear of during the home buying process to assure your transaction goes smoothly.

Don't buy luxury 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, jewelry, appliances, or vacations until closing. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Because lending institutions are perusing your financial accounts, a large cash purchase is also not advised.

Don't go on a job search. Lenders look for a consistent work history on your paperwork. Finding a new career (especially one with a better paycheck) may not affect your ability to qualify for your mortgage. However, getting a new career during your application process could affect your approval.

Don't change banks or move finances around in your accounts. As the lending institution reviews your loan package, you will probably be required to produce bank statements for the last few months for your saving and checking accounts, money market funds and other liquid wealth. To detect potential fraud, most loans require a thorough paper trail to verify the source of all funds. Even for practical reasons, transferring cash or changing banks may make it difficult for the lending institution to confirm your account history.

Don't give money directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Any good faith money is to go toward your expenses closing; some sellers might not understand this. An attorney or other type of neutral party can hold your earnest money, or you may put it temporarily into a trust account until closing. The disposition of earnest funds, if your transaction falls through, should be indicated in the purchase agreement with your seller.