BuyingHome Financing January 23, 2014

The Credit Trap

When you buy a home with a mortgage, you need to be aware that the simple purchase of a refrigerator on store credit can put your home purchase on ice.  And then you’ll have no where to put that new fridge.  While opening a new line of credit at a retailer won’t sink the credit for most people, those whose credit scores were already close to the threshold could easily send their score below the magic number.

We always advise our clients to hold off on any purchases until after their loan has closed.  We’ve also found that a few of our clients either forget this advice or in the excitement of buying a new home never hear it.

Why is it important to wait?  Because lenders will recheck your credit just before closing to make sure things haven’t changed.  When it takes 30 days to close a loan, you can imagine that there are some less than honest buyers who will try to game the system.  For this reason lenders have to be careful.

So hold off on buying that new car, dining set, or appliance combo until after you’ve closed your home purchase.  That is unless you’re paying cash… either your home or your home furnishings.