3 Reasons Why You Shouldn’t Make Large Purchases When Buying a Home

If you’re buying a home, you may be trying to secure a mortgage loan. Since the pandemic, mortgage lending restrictions have become very strict, so it’s important to successfully navigate the qualification and approval process without creating any issues. Making large purchases can put a kink in the process; here are three reasons why you should avoid that potential mistake.

1. A large purchase could change your debt-to-income ratio score that qualifies you for a loan. “Purchasing a new car or even a roomful of furniture could put you outside the debt-to-income limit,” explained Joe LaGiglia, Senior Mortgage Loan Originator with Oak Leaf Community Mortgage. “Losing that debt-to-income ratio position can disqualify you for the loan you need to buy your new home.”

2. Applying for new credit can negatively affect your credit score. “A new inquiry into your credit can lower your credit score, which has to be at a certain level before you will qualify for a mortgage loan,” added LaGiglia. “Credit scores are checked prior to closing, and having a lower score than you did when you first applied for a loan can have a negative effect on an impending approval.”

3. Major purchases require additional documentation. “Even if your debt-to-income ratio and credit score are okay, a major purchase can cause delays in closing due to the additional documentation that needs to be verified,” said LaGiglia. “It’s never a good idea to make a major purchase while you’re trying to be approved for a mortgage loan.”

LaGiglia recommends holding off on large purchases until your mortgage loan is approved and you’ve closed on the sale of the home. “Even if you’ve been pre-approved for a loan, it’s best to not make any big changes until after closing,” he said. “If you absolutely need to make a large purchase, communicate it to your lending team in advance so they anticipate the effect on your credit.”

For more information, please contact:

Joseph LaGiglia

Sr. Mortgage Loan Originator

630-936-3242

JosephL@MyOakLeaf.com

NMLS ID: 703971