Buyer Don'ts

What to Avoid During your Home Purchase

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Lots of 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 are still a few major hurdles to jump before the keys are handed over. Below you'll find a list of things to avoid during this crucial time of your home purchase.

Don't overspend on big-ticket items. You may be tempted to order that new couch for the soon-to-be-yours family room, but it's best to stay away from making big ticket purchases like furniture, appliances, jewelry, or vacations until your home loan closes. You may send up red flags with your lender if you buy new furniture on your credit cards in the middle of your loan process. It's also a mistake to make those large purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.

Don't go job hunting. Your recent work history should show stability. Getting a new job may not affect your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, switching careers in the middle of your loan process might affect your approval.

Don't switch banks or move finances around in your bank accounts. Bank statements from the last few months for all of your accounts (checking, savings, money market, and others) will likely be studied as the lending institution considers your approval. Your lender is looking for a consistent flow of your funds over the pay period, in the interest of avoiding fraud. Switching banks or transferring funds to another account - for whatever reason - could hinder the review of your accounts.

Don't give cash directly to your seller (generally in cases of "for sale by owner") for earnest money. Until the completion of the deal, any good faith deposit actually belongs to you. Some sellers might not know that your good faith funds are to be applied to your expenses upon closing. Get a lawyer or other neutral person who will hold the funds or place them in a trust account until closing. if your transaction fails, your contract with the seller should specify to whom your good faith deposit should go.