Don'ts When Buying a House

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their excitement straight to the mall or appliance store. Until your keys are in hand, there still remain some hurdles to jump. We have listed some things below we suggest you avoid when waiting for closing.

Don't overspend on big-ticket items You may be itching to buy that new entertainment center for the soon-to-be-yours living room, but it's advisable to stay away from making major buys like furniture, appliances, jewelry, or cars until your home loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase expensive items can even be a mistake: many lenders take into consideration your cash reserve when approving your mortgage.

Don't look for a new job Your recent work history should show stability. Getting a new career before you apply for a loan may not affect your approval at all. But for some people, getting a new career during the mortgage approval process might bring concern and hinder your application.

Don't take your accounts to a new bank or move around your money. While your lending institution considers your loan package, you will probably be instructed to produce bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid wealth. Your lending institution is looking for a steady rise and fall of your money over the pay period, in the interest of avoiding fraud. Switching banks or transferring money elsewhere - even if its only to consolidate funds - could make it harder for your lender to document your funds.

Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until closing, the earnest money actually belongs to you. Your seller might not know that your good faith money is to be applied to your expenses upon closing. It's advisable to put the money into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. The final disposition of good faith funds, if your sale fails, should be specified in the purchase agreement with your seller.