What to Avoid During a Home Purchase

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. Keep in mind that until closing, your lender is watching your accounts very closely. Here are some actions to avoid during the home buying process to be sure the transaction goes smoothly.

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 keep away from major purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you purchase new appliances on your credit cards in the middle of your loan process. It's also a mistake to make those big-ticket purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.

Don't go on a career search. Your recent job history should show consistency. Finding a new job (especially one with a better salary) may not affect your ability to qualify for a mortgage. But for some, switching jobs during the mortgage application process could raise concern and hinder your application.

Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for accounts in your name (savings, checking, money market, and others) will likely be reviewed as the lender considers your mortgage application. Your lender will need to see a steady rise and fall of your money over the month, in order to avoid fraud. No matter the purpose, switching banks or moving money from one account to another could raise a red flag with the lender and impede your qualification process.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith money actually belongs to you. Your seller might not know that any good faith funds is to go toward your expenses at closing. We recommend that you put the money into a trust account, or get an attorney to hold it until closing. The contract should specify who gets the deposit if the transaction does not go through.