Things to avoid before buying a home

Many prospective home buyers make mistakes prior to purchasing their home and it can have a detrimental affect on your ability to purchase the home of your dreams. When you know you are getting ready to purchase a home whether your a first-time buyer or you're selling your current home, don't make the following mistakes and it will help you get a good loan and make the mortgage process easier once you start.

• Don't make an expensive purchases. It may be tempting to order that new sofa for your soon-to-be living room, but its best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. When you make a credit purchase you can actually cause your credit score to dip for a few months, even if you make all your payments on time. Using cash to purchase big items can also create a problem because many banks take into consideration your cash reserve when approving your mortgage.

• Don't 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 - especially if you are going to be making more money. But for some people, getting a new job during the loan approval process could raise some concern and affect your application. It is important to lenders that you stay in the same occupation, you can get a new employer in the months preceding a home purchase, but if you change occupations this may raise red flags when the underwriter is considering your loan.

• Don't 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 its just to consolidate funds - could make it difficult for the lender to document your funds.

• Don't give a good faith deposit directly to the seller in a FSBO purchase. As a rule, your good faith deposit belongs to you, not to the seller, until closing. Your FSBO seller may not know that your good faith funds should be applied to your expenses at closing. Get an attorney or other neutral party who can hold the deposit, such as an escrow agent, 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.

• Don't disregard your lenders 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 may need copies of your bank statements, W2s and other paperwork. It is up to you to get it to him or her as soon as possible. Failure to submit certain qualifying documents could cause you to lose your loan and the financing you need to buy your home.

• Don't sign a purchase contract without getting pre-approved. Many home buyers get so excited when they see a home that would be perfect for them that they make and offer and sign a purchase contract prior to getting approved for the loan that they need. To avoid this mistake, get pre-approved first and then go out house hunting because you will know exactly what you can afford and your real estate agent will have greater bargaining power with a pre-approval letter.