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01.28.18

5 Items To Wait To Buy Until After Your Mortgage Loan Closes

It’s perfectly normal to be excited about finally purchasing the home you’ve always dreamed of.

Now you’re ready to ditch the hand-me-down furniture you’ve used for years and pick up that new matching bedroom set. There’s only one problem. Your mortgage loan hasn’t closed yet. It’s common to think that buying a few pieces of new furniture is OK as long as you’re not paying any interest or don’t have to make any payments until after your mortgage loan closes.

Unfortunately, even with 0% financing and no payments until the following year, the furniture store is still going to run your credit, which could cause a temporary drop in your credit score.

New federal regulations require mortgage lenders to run a borrower’s credit again right before closing, even after the loan has already been approved. If you were close to the credit limit for your particular rate, simply buying that new furniture before your mortgage loan is closed could be enough to cause your loan not to close on time with the rate you wanted. Likewise, taking on new scheduled debt payments regardless if you’re paying interest or not could affect your debt-to-income ratio. If your ratios were close, the extra payments could cause you to no longer qualify or at the very least, delay your closing.

Just to be safe, here are 5 things you should avoid buying during the loan process:

1. New furniture

We know you can’t wait to pick out that new sectional and we’re super excited for you to have the new living room to put it in. Help us make that a reality and save the purchase until after closing.

2. Cars, boats, etc.

Even if you’ve saved and budgeted for a new car or toy, they still have to run your credit. Save yourself the headache and wait until your loan has closed.

3. Large appliances

Similar to new furniture, many homebuyers can’t wait to get that new stove or refrigerator for their new kitchen. Just like furniture stores, many appliance vendors offer no interest financing. However, they still run your credit and should be purchased after your loan closes.

4. Clothes

Clothes? Yes, clothes. It’s so easy to overlook something as simple as signing up for a department store credit card. However, just like applying for any other form of credit, clothing stores also run your credit when you sign up to save that 10% on your purchase. The result could drop your credit score just enough to hamper your home purchase.

5. Anything on Credit

By now, you’ve probably spotted the trend. Any purchase that requires you to obtain credit, even at no interest, should be avoided during the loan process.  Even if you don’t intend to buy anything, it’s tempting to sign up for that great credit card offer you just received with 50,000 points/miles. If you really want the special offer, just call the card company and let them know you’re buying a home. Chances are they will honor the offer after your loan has closed.

If you’re unsure about a purchase, the safe bet is to call your Summit Mortgage Loan Officer first. If they tell you it’s OK to make that large purchase you’re looking at, you can, at the very least, rest easy knowing you didn’t jeopardize your mortgage loan with your purchase.

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