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Avoid Using Credit before or during A Home Purchase |
Buyers who are in the process of buying a home, or even thinking about buying a home, should not make any significant purchases on credit. Every buyer's mortgage approval is subject to cancellation at any time up until the final loan documents are signed during the closing of escrow.
Many lenders will make a final evaluation of a buyer's financial situation just prior to funding a loan. This evaluation may include running a second credit check to look for any new credit accounts or to see whether any purchases have recently been made on existing credit accounts. Every $100 added per month in credit payments can cost about $10,000 in loan eligibility.
For example, a car payment of $300 per month could cost a home buyer $30,000 in reduced mortgage qualification. Even worse, some buyers have been completely disqualified from being able to get a reasonable loan because of buying a "big-ticket item" while trying to close their home purchase.
Especially avoid buying any furniture, appliances, window coverings, automobiles, boats, motorcycles, or other such items. Even buyers who have accumulated plenty of savings should not make any large purchases until after closing. (Check with your loan officer for details.)
The last thing a buyer wants to know is that he could have purchased a new home had he only curbed the urge to spend. |
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