Facebook Share Twitter Share Linkedin Share Pinterest Share
What You Shouldn’t Do Right Before You Buy a Home

What You Shouldn’t Do Right Before You Buy a Home

Deciding to purchase a home is a very exciting step to take! Now that you have gone through the necessary final steps, it’s still important to keep your finances in shape during contingency.  Any big financial changes might lead to lenders reconsidering financing options before you close on your new home. 


Don’t Make Any Big Purchases

When you are thinking about your new space, it might be tempting to purchase new furniture to decorate your home with or purchasing a new car to enjoy with your home.  Even if you can get a good interest rate or score some furniture sales, it's best to wait to make any big purchases until after you move in.  Your loan pre-approval was based on the state of your credit and your debt load at the time of pre-approval before you bought a car. Adding the debt that the car purchase will bring may make you unable to get the loan for your home.


Don’t Switch Jobs

While a new job or a career change is something to celebrate, you might want to rethink the timing if you are about to purchase a new home.  Going from full time to part-time, salary to commission, and employee to contractor could all raise red flags for your lender. The good news is that changes in the other direction, like moving from part-time to full-time employment or taking on a new role at the same company, shouldn’t impact your ability to close! Although, to be on the safe side you should ask your lending agent before making any changes. 

Make Payments On Time

During this time, you want to make sure that you are making all of your payments on time.  This is a stressful process, and it is easy to forget about a payment or two, but this could impact you negatively.  Making all of your payments on time will not only help boost your credit score, but it will show a lender that you are responsible and a good client to take on.  


Don’t Open a New Line of Credit

During the contingency process, it’s important not to make any decisions that could affect your credit rating.  Opening a new line of credit, even if it is small, could hurt your debt to income ratio and make a lender think twice.  Opening a store credit card or even extending a current line of credit should wait until after you close on your home and make a couple of mortgage payments! 


Don’t Spend Money You’ll Need For Closing

When it comes time to close, you will need some extra cash for your inspection and any other closing costs the sellers are not covering.  When you are in the market for a new home, it’s a good idea to start budgeting for extra costs to limit the amount you are putting on credit cards.  Consider even creating a separate savings account that you can add to each month.  


Purchasing a new home is a big achievement! With these few financial tips, you will be well on your way to the closing table and moving into your new home.  If you have any questions on how to move forward with your finances, be sure to ask your realtor about our Mortgage company, West Penn Financial.