One of the biggest mistakes that new homebuyers sometimes make is purchasing new furniture, electronics, or appliances. A homebuyer may get so excited about her new home, that he will purchase furniture or appliances for the new home. Perhaps the homebuyer wants new electronics, such as a television, computer, or stereo system in his new home. That’s the biggest mistake a homebuyer could make!
It is easy to get excited, but buying items on credit can ruin your mortgage loan approval.
How would you like to have new furniture, brand new appliances, a new flat-screen television, and yet have no house to put them in? That would be very disappointing, wouldn’t it. That is what could happen if you jeopardize your loan by making purchases on credit BEFORE you close escrow.
Your lender is going to run your credit check again.
You probably were not aware of this, but a few days before closing, your mortgage lender will pull your credit report again. He will verify that your credit is still the same as it was when you applied for the loan. If additional items show up on your credit report, such as a new account you applied for, it could change your loan approval.
If a new credit account shows up on your report, the lender will ask you to write a letter called LOE, which stands for letter of explanation. If you were approved for the new credit account, the lender will recalculate your debt ratio to include your new debt, which means your debt may now be too high to qualify for your mortgage loan.
Save your cash for closing costs.
You need to keep your priorities in mind. Your first priority it is to get your home purchase closed and get the keys in your hand. Your next priority is to make sure that you can afford to pay the mortgage each month. Don’t jeopardize your dream home!
Read more in our book, "Buy Your First Home", http://tinyurl.com/nrvmgc7.
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