Awhile back, a young couple came to me for help with buying their first home. We chatted about their goals and got them hooked up with one of my amazing lenders to get pre-approved. My lender had looked over the file quickly and told them it looked ok and she thought she could get them approved, but needed to finish getting their information to make it official.
While the buyers were getting the lender the info she needed, they went out and bought a new truck. This was a really nice truck with all of the bells and whistles you would want on a truck. Congrats to them...or is it congrats? Well, after the lender found out about the truck and added the new large debt and payment into their current data, it put them over the maximum debt-to-income ratio they allowed and it killed their approval! Both myself and the lender mentioned not making any big purchases, but these young buyers thought it would be ok since it didn't seem like that much more a month.
The buyers were saddened by the news and was forced to stay in their apartment instead of becoming home owners.They stayed in touch with me and recently said they wanted to try and find a home to lease, and try to buy a home in a year. So, we put together a search, found this nice lease home for them, got them approved, and they are moving in as I type this. Over the next year they will work on their credit and their debt-to-income ratios and hopefully be ready to try again!
When you want to buy a home, it is critical to put a pause on all credit activity. That means not applying for any credit, not buying cars, not buying furniture and basically anything financial until after you sign the papers on the new home and it funds. Then, you can do whatever you want with buying things. What I like to tell my buyers while we are working on getting them a home, is always reach out to the lender before they do anything with credit, new accounts, and big purchases. Let the lender know and let the lender see if that would affect anything with the approval. If not, then they will tell you to go ahead any make the purchase or to apply for that loan or whatever. It is much better to stop all of that type of activity when buying a home, but check with the lender first, before making any changes to your credit or finances.
If you are looking to buy a home, reach out to me and I can guide you through the process from start to finish!