Don't Trip Yourself up While Buying your New Home

What's more fun than buying a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes could be trouble. Keep in mind that until you get the keys, your lender is watching your finances very closely. Here are some things to avoid during the home buying process to be sure the transaction goes well.

Don't make expensive purchases. Although you will be dreaming of ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and vehicle purchases until the closing of your loan. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. Because lending institutions are reviewing your bank accounts, a large cash purchase is also not advised.

Don't go on a job search. Your recent job history should show stability. Changing jobs may not affect your ability to qualify for a loan - particularly if you are going to be making more money. But for some people, changing jobs during the mortgage loan application process could bring concern and stymie your approval.

Don't move cash around or change banks. Most lenders will require you to provide recent bank statements of accounts in your name: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most lending institutions require a detailed paper trail to document the source of all incoming funds. Changing banks or transferring money to another account - no matter the reason - might make it harder for your lender to verify your funds.

Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your earnest money does not belong to the seller: it remains yours until closing. Although your FSBO seller might not realize this, the good faith funds should be used for your closing expenses. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. Should your sale fall through, the contract with the seller should document to whom the good faith funds should go.