Things to Avoid While Purchasing a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. It's best to remember that until closing, your lender is watching your finances very closely. Here are some actions to refrain from before closing to be sure your transaction goes well.

Don't make expensive purchases. Although you will be planning ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until the closing of your loan. Your lender may send up red flags if you buy new electronics on your credit cards in the middle of your loan process. Since lenders are examining your financial accounts, a large cash purchase is also not advised.

Don't look for a new job. Your recent job history should show consistency. Finding a new career (especially one with a bigger paycheck) may not affect your ability to qualify for a loan. However, if you switch careers before you qualify, your loan process could fail or be stalled.

Don't switch your accounts to a new bank or move around your cash. Bank statements from recent months for your accounts (savings, checking, money market, and others) will likely be analyzed as the lender considers your application. To avoid fraud, lenders require a consistent portrayal of how you earn your money and where additional funds come from. Even for practical purposes, transferring funds or changing banks may make it difficult for the lending institution to verify your bank history.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the earnest money actually belongs to you. Some sellers might not know that these good faith funds is to go toward your expenses upon closing. Find a lawyer or other neutral person who can hang on to the funds or place them in a trust account until you close. The disposition of good faith funds, in the case of a failed transaction, should be written in the purchase agreement with your seller.