Don't Trip Yourself up While Buying your Home

With the thrill 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. There are still a few major hurdles to jump before closing. Here are some actions to refrain from during the home buying process to be sure the transaction goes smoothly.

Don't throw your money around. You may be tempted to buy that new easy-chair for the soon-to-be-yours family room, but it's advisable to avoid making major purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's also a mistake to make those large purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.

Don't get a new job. Your recent career history should show consistency. Getting a new job before you apply for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your process could fail or be stalled.

Don't switch your accounts to a new bank or move around your money. As your lending institution considers your mortgage loan package, you will probably be instructed to submit bank statements for the last two or three months for your checking and savings accounts, money market accounts and other liquid wealth. Your lender looks for a steady rise and fall of your funds each pay period, in order to avoid fraud. No matter the purpose, changing banks or moving funds from one account to another might raise a red flag with the lender and impede your approval process.

Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith money does not belong to the seller: it is actually yours until closing. Your seller might not know that these good faith funds must go toward your expenses at closing. We recommend that you put the deposit into a trust account, or get an attorney to hold it until closing. The purchase agreement should dictate who gets the deposit if the home purchase does not go through.