What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. There still remain a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't throw your money around. It may be tempting to order that new easy-chair for the soon-to-be-yours den, but it's best to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until closing. Your lender may send up red flags if you finance new electronics on your credit cards during your loan process. Using cash to purchase big items can even create a mistake: many lending institutions consider your available cash when approving your application.
Don't go on a job search. Your recent career history should show stability. Getting a new career before you start the application process for a mortgage loan may not affect your approval at all. But for some people, getting a new career during the loan application process could raise concern and stymie your application.
Don't take your accounts to a new bank or move around your money. Bank statements from recent months for accounts in your name (checking, savings, money market, and others) will be reviewed as the lending institution considers your loan application. The lender needs to see a steady rise and fall of your money over the month, in order to rule out fraud. Even for practical purposes, moving around money or changing banks might make it more difficult for your lending institution to verify your bank history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's until the sale is final. Some FSBO sellers might not realize that the earnest money must be applied to your expenses upon closing. Get an attorney or other neutral party who is able to hang on to the funds or put them in a trust account until closing. If your home purchase fails, your purchase contract should specify where this earnest money should go.