Buyer don'ts - Things to avoid before buying a home

Some new homebuyers make the mistake of rushing out to buy things to fill up their home as soon as the seller accepts their purchase agreement and the lender pre-approves their loan. But there are still a few major hurdles to overcome before the keys are handed out. Here are some things to avoid during the home buying process to ensure that your transaction goes as smoothly as possible:

• Dont make an expensive purchase. It may be tempting to order that new sofa for your soon-to-be living room, but it is best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. Financing that furniture with a store credit card or even a VISA card, for example, may jeopardize your credit worthiness at a time when good credit counts the most. Using cash to purchase big items may also create a problem because many lenders take your cash reserve into consideration when approving a mortgage.

• Dont get a new job. Lenders like to see a consistent job history. Generally, changing jobs will not affect your ability to qualify for a mortgage loan, unless you are going to be making more money. But for some people, getting a new job during the loan approval process might raise some concerns that affect your application. Some employers will require a probation period after you start a new job, and, therefore, will not commit in writing to how long they expect to keep you in your new position. Consequently, switching jobs during the loan process may actually result in the denial of your loan.

• Dont switch banks or move money around. As your lender reviews your loan package, you will likely be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds. Changing banks or transferring money to another account (even if it is only to consolidate funds) may make it difficult for the lender to document your funds.

• Don't give an earnest money deposit directly to the seller in a FSBO purchase. As a rule, your earnest money deposit belongs to you, not to the seller, until the transaction closes. Your for-sale-by-owner (FSBO) seller may not know that your earnest money should be applied to your expenses at closing. Get an attorney or other neutral party who can hold the deposit or put it in a trust account until you close on the home. Your purchase contract should dictate to whom the funds go should the transaction fall through.

• Dont disregard your lender's requirements. You may have been pre-approved for the loan but your work with the lender is far from over. In order to process your loan, you need to meet certain requirements. Your lender will need copies of your bank statements, W2s and other paperwork. It is up to you to get those documents to the lender as soon as possible. Failure to submit certain qualifying documents may cause you to lose your loan and the financing you need to buy your home. Be sure you get all required documents to your loan officer ASAP.