Don't Trip Yourself up While Buying a New Home

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With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Here are some actions to avoid before closing to assure your transaction goes smoothly.

Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's even a bad idea to make those large purchases with cash. Lenders are looking at your cash on hand when considering your loan.

Don't go on a career search. Lending Institutions like to see a consistent job history on your application. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are getting a better salary. However, switching careers during your approval process may influence whether or not you are approved.

Don't switch your accounts to a new bank or move around your money. As the lender reviews your loan application, you will likely be asked to submit bank statements for recent months for your checking accounts, savings accounts, money market accounts and other liquid wealth. To avoid potential fraud, most loans require a detailed paper trail to verify the source of all incoming funds. No matter the purpose, switching banks or moving funds from one account to another might raise a red flag with the lender and slow your application process.

Don't give money directly to your seller (usually in cases of "for sale by owner") to be used as earnest money. Until the completion of the deal, the good faith deposit remains yours. Any earnest money is to go toward your expenses upon closing; some FSBO sellers may not know this. Find a lawyer or other neutral person who can hang on to the money or put it in a trust account until you close. Your purchase agreement should specify who keeps the deposit if the home purchase does not go through.