Closing on a home mortgage is an exciting yet delicate process. And one of the biggest mistakes you can make during this period is purchasing big-ticket items. Today we dive into why this is such a costly error and how you can avoid it.
Impact On Your Credit Score
Mistake number one is the impact on your credit score. Buying expensive items often means using credit, whether it’s a new car, furniture, or even electronics. This can lead to a sudden increase in your debt-to-income ratio and a dip in your credit score.
Lenders check your credit multiple times during the mortgage process, right up until closing. Any significant changes can raise red flags and potentially lead to your loan being denied.
Decreased Cash Reserves
Mistake number two: Decreased cash reserves. Lenders want to see that you have enough money saved up for your down payment, closing costs, and a financial cushion post-purchase.
Spending a lot on big-ticket items can deplete your savings, making you appear financially unstable to lenders. This can lead to a delay in your mortgage approval or even a rejection.
Changes in Financial Profile
Mistake number three: Changes in your financial profile. Major purchases can alter your financial situation significantly, and lenders may need to re-evaluate your mortgage application.
This re-evaluation can cause delays, additional paperwork, and increased scrutiny. In some cases, it might even result in a higher interest rate or altered loan terms.
Here are some tips on how to avoid these costly mistakes:
- Hold off on major purchases: Wait until after your mortgage has closed to buy any big-ticket items.
- Stick to your budget: Keep your spending in check and avoid any unnecessary financial changes.
- Consult your lender: If you’re unsure about a purchase, talk to your lender first. They can provide guidance on how it might impact your mortgage approval.
By being cautious with your spending and maintaining financial stability, you’ll increase your chances of a smooth and successful mortgage closing. If you’re ready to navigate the homebuying jungle with a professional by your side? Let’s connect! I’m here to guide you through the process and make your dream home a reality.
Sabriyah Callis | NMLS #2537498 | Equal Housing Lender
FTC Disclaimer: This is not a sponsored video or article. All opinions are genuinely my own. This post also contains affiliate links and I earn a small commission if you make a purchase after clicking on my links. It does not cost you any extra. Thank you for your continued support to keep the Bri Callis Blog going!
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