Your mortgage loan is approved, the home is under contract, and your closing date is all set. Time to treat yourself to that gorgeous sectional you’ve been eyeing at Arhaus as a Christmas present to yourself, right? Sorry, but step away from the AMEX. Before you close on your mortgage, it’s critical to avoid taking steps with your finances that could derail the closing process, says loan consultant Lisa Peters of Caliber Home Loans.
“It’s the holiday shopping season, but if you’re in the process of closing on a home, avoid making any large purchases,” Peters says. “It may negatively impact your ability to close.”
That’s because making major changes to your credit, or even employment situation, can change your financial profile as a borrower. Lenders are concerned about a borrower’s debt-to-income ratio, so they may question any large financial transactions they see during underwriting.
But what is considered a large purchase during closing?
Well, buying that comfy sofa for a few thousand probably won’t make too bad a dent and derail closing, but springing for that $18,000 artisan-finished leather sectional just might. I know that’s super disappointing considering you’ve probably paid down your other credit cards and paid off car loans and otherwise cleaned up your credit ahead of applying for a mortgage.
Even applying for a credit card or car loan can affect your mortgage rate. To get the information it needs, the lender will request your credit file from the credit bureaus. That results in a “hard inquiry” that shows up on your credit report and may affect your credit rating, according to Experian.
Considering the scarcity of homes right now, the last thing you want to do is jeopardize the closing and getting those keys in your hands. Give Lisa Peters of Caliber Home Loans a call at 214-763-7931 or email her at [email protected] to discuss a home loan designed for you.
