Don't Trip Yourself up While Buying a Home

With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Until the house is really yours, there still remain some hoops to jump through. We have listed some things below you will want to avoid when waiting for your loan to close.

Don't buy luxury items. Although you may be listing ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Because lenders are perusing your bank accounts, a large cash purchase is also not advised.

Don't go on a job search. Lenders like to see a consistent work history on your application. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before approval, your loan process could fail or be slowed down.

Don't change banks or move finances around in your bank accounts. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and others) will be analyzed as the lender considers your application. To eliminate potential fraud, most lenders want detailed paperwork to verify the source of all cash. Even for practical purposes, transferring money or changing banks might make it difficult for the lending institution to document your account history.

Don't give money directly to your seller (usually in the case of of "for sale by owner") for a "good faith" deposit. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Your seller might not know that these good faith funds must be used for your expenses at closing. Get an attorney or other neutral party who is able to hold the money or place it in a trust account until closing. Your contract should document who keeps the money if the home purchase falls through.