Avoid Large Credit Purchases Before Closing
When you’re in the process of buying a home, it’s hard not to get excited about moving into your house. You may be tempted to buy new pieces of furniture or high-end appliances before closing.
But making large purchases before your mortgage loan is closed – even those with offers of “no payments for one year and no interest” – can affect your credit score and the debt-to-income ratio lenders use to determine the amount of money you can borrow.
In some cases, these purchases can throw off your credit score so much that you are denied the mortgage loan all together. Keep in mind that large purcahases don’t just include things for your new home but also things like a new car or a newly opened line of credit.
GOOD TO KNOW:
If new credit inquiries appear on your credit report prior to closing, lenders must investigate them to determine whether any new debt might require a re-underwriting of the originally quoted terms.
Avoid making any major purchases for the first six to 12 months after you purchase your home. These big purchases may stress your budget at a time when you’re getting used to your new mortgage and utility payments. This timeframe will give you an opportunity to learn about your new household bills and consider what you really need in your home.
Learn more about the homebuying process by signing up for our free homebuyer class.