Things to Avoid While Buying a New Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Until the house is really yours, there still remain some hurdles to jump. We have listed some things below we suggest you avoid when waiting for your loan to close.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. Using plastic to buy furniture could jeopardize your loan process by distorting your numbers. Because lenders are looking closely at your bank accounts, a large cash purchase is also a mistake.

Don't go on a job search. Consistency in your work history is a good thing to banks and other lenders. Finding a new job (especially one with a better paycheck) may not jeopardize your ability to qualify for a loan. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.

Don't switch your accounts to a new bank or move around your finances. While your lender considers your mortgage application, you will probably be instructed to submit bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid wealth. Your lender looks for a consistent flow of your funds each pay period, in order to avoid fraud. Changing banks or transferring funds to another account - for whatever reason - may make it difficult for the lender to review your funds.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your earnest money does not belong to the seller: it remains yours until the sale closes. Any earnest money is to be applied to your expenses upon closing; some sellers may not know this. An attorney or other type of neutral party can hold onto your earnest money, or you may put it temporarily into a trust account until you close. The disposition of earnest funds, if your transaction fails, should be indicated in the contract with the seller.