Once you’ve found your dream home, and signed the paperwork to purchase it, it’s only natural that you’d want to start buying things to put in it. But any big purchases made before you actually close on the home can still have an effect on your credit. This article from MarketWatch offers some helpful advice on steps you can take to ensure your credit remains where it needs to be in order to close on your home.
The loan is approved, the contract is signed, the title is clean, the closing date is set, and everything seems on track to get that home.
And then some people do the unthinkable that costs them their dream home.
“I’ve had clients call me and say they’ve quit their job, or bought a new car,” just before close, says Mark Livingstone, a mortgage broker with Cornerstone First Financial in Washington, D.C. “All I can do say “what were you thinking? I’ve seen a number of deals fall through that way.”
It’s tempting to splurge just before you buy a home. After all, you’ve probably got big-ticket items to buy like a washer and dryer, or a lawn mower, or new furniture, or bedding. And you’ve probably paid down your other credit cards and paid off car loans and otherwise cleaned up anything bad on your credit ahead of applying for a mortgage. Now there’s a store offering you a $10,000 line of credit for furniture with no payments for a year so you can fill your new house?
Don’t do it. At least, not before you close.
“Banks are going to question almost any meaningful transaction you make while you’re applying for a mortgage,” says Douglas Boneparth, a financial planner in New York City. “So, until you close and the keys are in your hands, you are under the magnifying glass,” he says.
If you need new furniture to fill your house, consider renting it for a few months. There’s often no hard credit check and given that your store-bought furniture will likely take several weeks or months to be delivered, and it can be a more cost-effective option.
