What to Avoid During a Home Purchase

What's more fun than getting a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes can be an error. There still remain a few major hurdles to jump before the house is really yours. Below you'll find a list of actions to stay away from during this critical time of your home purchase.

Don't overspend on big-ticket items It may be tempting to buy that new Turkish rug for the soon-to-be-yours den, but it's best to stay away from making large purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's even a red flag to make those big-ticket purchases with cash. Lending Institutions are examining your available cash when considering your loan.

Don't look for a new job. Consistency in your work history is a good thing to banks and other lenders. Getting a new job may not compromise your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, getting a new career in the middle of the loan process may affect your approval.

Don't change banks or move finances around in your accounts. As your lending institution reviews your mortgage package, you will probably be instructed to provide bank statements for the last two months on your saving and checking accounts, money market accounts and other liquid assets. In order to eliminate fraud, lenders want to see a consistent portrayal of how you earn your money and where any additional wealth comes from. Switching banks or moving funds elsewhere - even if its just to consolidate funds - might make it harder for the lender to document your funds.

Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's up until the deal closes. Any good faith money is to go toward your expenses closing; your individual seller may not realize this. A neutral party, usually a title company can hang onto your deposit until you close. The purchase contract should indicate who gets the earnest funds if the transaction does not go through.