Every single number counts when it comes to your credit score. Picture this: you’ve spent countless hours searching for the perfect house. You searched online, attended countless open houses, got pre-qualified for a mortgage and hired an agent to show you houses and then represent and guide you through the process of buying a home. After viewing over two dozen properties, you wrote an offer and came to terms with the seller. You paid your earnest money, met your inspection and testing contingencies and even had your appraisal come back just above the purchase price. You have been paying your bills on time to keep your credit from heading south. Your closing is scheduled, and you think everything is smooth sailing from here on out. Today is the day before closing and you receive a phone call from your lender – it’s the worst news possible – you no longer qualify for the mortgage. The house that you’ve spent countless hours preparing for will not be yours tomorrow. “What happened, why don’t I qualify?” you ask in disbelief. The response is simple. Your credit score dropped.
When your mortgage lender issues you a pre-qualification, one of the determining factors is your credit score. With the tighter lending regulations, your credit score needs to be a minimum 640 to qualify. Many times, buyers are pre-qualified, but are within two or three points of not qualifying. An easy way for your score to drop would be opening a line of credit at an appliance or furniture store. Another thing to remember is getting a new credit card can also lower your score. Next time you are checking out, and the clerk asks if you would like to save money be opening a store credit card, your answer should be, “No thank you.” Both of these occurrences will require a credit check, and a credit check will lower your credit score. Buying furniture or appliances before you close on your new house might make sense, but it will lower your score and could affect your debt to income ratio.
So remember, if you want to make it to the closing table, pay your bills on time, don’t get any new credit cards and definitely wait until after your closing to buy new furniture or appliances on credit! It would be a shame to go through the whole process of buying a new home, and then end up homeless! If you are looking for someone to help guide you through the buying process, we can help.
The Kuchta’s, Kelly & Colleen
Tags: area real estate, buying a home, credit card advice, credit checks, credit scores, current housing market, first time home buyer, Home Buying Tips, living in milwaukee, milwaukee lifestyle, real estate advice, real estate market, real estate opportunities, real estate trends, the kuchtas