Think Before You Spend: The Homebuying Mistake You Don't Want to Make

You're almost there—about to cross the finish line of your homebuying marathon. But there's one common pitfall that can trip you up at the last minute: making big purchases before you close on your new home. 🏡

Why Big Buys Are a Big No-No

When you apply for a mortgage, lenders look at your financial health: your credit score, your debt, and your income. It's like a financial snapshot, saying, "Right now, you're good for the money." 📸💵

But here's the catch: your financial health needs to remain stable between the initial approval and the final closing. When you make a large purchase, it can change your financial picture significantly. Here's how:

• Increased Debt-to-Income Ratio: This is a key factor lenders consider. If you take on more debt, you might go beyond the acceptable ratio.

• Lower Credit Score: Applying for new credit can cause a temporary dip in your credit score. Plus, if you're spending a lot, it can look like you're overextending financially.

• Red Flags for Lenders: Lenders get nervous if it seems like your spending habits are changing for the worse. They might think you'll have trouble making your mortgage payments.

Real-Life Consequences

Imagine this: You're two weeks from closing on your dream home. You decide to buy that massive new TV or the latest model car to celebrate. You think, "What's the harm?" Then, bam! Your lender rechecks your credit before closing and sees your recent spending spree. Suddenly, your loan approval is in jeopardy, and so is your home purchase.

The Safe Path to Homeownership

To keep your home-buying journey on track, follow these simple tips:

1. Stick to Your Budget: Avoid any major purchases that could affect your financial situation.

2. Keep Your Credit Stable: Now's not the time to open new credit cards or rack up debt.

3. Communicate With Your Lender: If you must make a significant purchase, talk to your lender first to understand the implications.

4. Be Patient: Wait until after you have the keys to your new home before buying furniture, appliances, or going on a shopping spree.

Want to Learn More?

We've got plenty of resources and expert advice on navigating the homebuying process without making critical errors. Remember, the patience you practice now will pay off when you're finally handed the keys to your new home—debt-free and stress-free!