Blog

Not Yet

Why you should wait to spend big if you’re closing on a house

The closer you are to closing on a house, the tighter your wallet should be. It’s natural to get excited about your new home — maybe you’re considering adding some new furniture to go with it — but you might want to hold off on big purchases for a bit. Here’s why.

A Pre-Approval is Just a Start

Let’s say you got pre-approved for your mortgage. Then what’s the problem with making a big purchase before the house is signed, sealed and delivered? Well, a pre-approval doesn’t guarantee your rate. Before you close on a home, your lender will once again review all of your info, and if there’s suddenly heaps of debt on your credit card, that’ll be a red flag.

Your Credit Will Be Impacted

As USA Today notes, a big purchase on your credit card will impact your credit utilization ratio. That number — credit used compared to your total credit available — should be below 30 percent. If you spend big, that number will likely go up, which will knock your credit score temporarily. When your lender reviews your info and sees a lower credit score and more debt, they could be tempted to revoke that nice mortgage rate you worked so hard to get.

You Can Just Wait

When you’re close to buying a home, your best bet is to do nothing. Instead of making big purchases or applying for a separate loan before you’re in the house, simply wait the process out. Once you close, you can go ahead and grab that new couch (as long as you can pay it off at the end of the month!). A little patience will go a long way.

View Our Rates