Thinking About That New House?
Decorating your house and buying new furniture is all a part of the fun of being a homeowner, right? You may be tempted to start making large and small purchases during your mortgage process to prepare for your move in day, but it is important that you wait until you close on your loan. You can easily alter your credit score by spending more than the preferred credit utilization amount. The general rule for credit use is to maintain your credit under 30% to preserve a good score.
Why You Should Wait to Buy
You might think that paying in cash would be a loophole, but there is a problem with that. Using large amounts of cash will quickly put a dent into your savings that you have worked so hard to build up. You will need those saving for costs that come out of pocket during the mortgage process like appraisal fees, home inspections, and earnest money.
If your debt-to-income (DTI) ratio is getting close to the maximum amount allowed for your loan type, you should be very careful about using credit. Making any large or small purchases can push your DTI over the max limit. At the end of the mortgage process, lenders do a soft credit pull to ensure that the credit is the same and nothing needs to be reworked. If your credit score has changed, your loan will need to be send back into underwriting, which can delay you from getting into your new home.
Talk to Your Loan Advisor!
If you must make any large purchases during the mortgage process, because things can happen unexpectantly, tell your home loan advisor right away. They should be aware of what changes to expect and any alterations to the current DTI. Your loan advisor is here to guide you through the maze of the mortgage process and provide TONS of valuable information to you.
If you have any questions about getting started with the mortgage process or if you would like to have a free consultation to discuss your situation with one of our licensed mortgage professionals, call us today!