Dont's When Buying a House

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of bringing their enthusiasm straight to the mall or furniture store. Until closing, there are still some hoops to jump through. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.

Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until the loan closes. You may send up red flags with your lender if you finance new appliances on your credit cards during your loan process. It's also a mistake to make those big purchases using cash. Lenders are examining your cash reserve when considering your loan.

Don't go on a job hunt. Your recent work history should show consistency. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are improving your salary. But for some, getting a new job during the loan approval process might bring concern and hinder your application.

Don't change banks or move finances around in your bank accounts. Most lenders will instruct the submission of recent bank statements on your accounts: savings, checking, money market, and other liquid assets. To avoid potential fraud, most lenders want a detailed paper trail to determine the source of all cash. Switching banks or transferring finances to another account - for whatever reason - may hinder the documentation of your funds.

Don't give money directly to your seller (commonly in the case of of "for sale by owner") for earnest money. Until closing, any earnest money actually belongs to you. Any earnest funds are to go toward your expenses closing; a FSBO seller may not realize this. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until closing. Should your home purchase fail, the contract with the seller should dictate to whom the good faith deposit should go.