Financing a new home can be both a stressful and satisfying experience. Unfortunately, in today’s lending environment, much of the stress is created during the process of getting your loan approved. A good lender will prepare you for the financing portion of your journey. Many of the new regulations are necessary and good lenders have adapted their systems to soften the impact on consumers. The best way to begin the process (and avoid stress) is to get a valid pre-approval.
Our goal is to create more satisfaction and less stress. Your next step to moving into your new home is formally applying for your financing. But beware of any spending that could halt your homeownership dreams! These include:
- Buy a new car.
- Purchase new furniture for after the move, discounted by opening a new credit card account.
- Take a vacation, using existing credit cards.
- Order blinds, drapes and few new appliances online to decorate, no doubt, using a credit card.
These are the spending and credit traps we need to talk about. A good lender will talk with you about the time period between applying for your loan and the closing. Believe it or not, any of the actions described above could increase the cost of your financing or, in extreme cases, cause you to no longer be qualified for financing. Take our first example — a new car payment will likely affect your purchase power or your ability to qualify at all. Even the second example could prove costly, as opening up new revolving credit will often lower your credit score and increase your cost to get financing. What about using existing credit cards? Charging up existing cards for any of the reasons described above could both lower your credit score and affect your ability to qualify.
The answer is simple: once you’ve applied for your financing, refrain from making any major purchases. If you do have a need prior to closing, discuss your plans with your lender before taking any action. A good lender will take the time to advise you and create a plan of action that everyone can live with. Buying a home is the most expensive investment most people will make. Surround yourself with experts that will make your journey a satisfying experience.