Credit Tip: Avoid New Debt Before Closing

One of the questions we are sometimes asked is whether it’s okay to go ahead and start buying furniture and appliances now that the house is under contract and a closing date is scheduled.  Doing so can mean the death of an otherwise stress-free loan, so the answer is definitely NO!

Incurring new debt impacts your debt to income ratio (DTI), adds a credit inquiry to your credit file, and can ultimately cause delays if we have to order “credit supplements” for your file.  A supplement is ordered to add new trade lines to your credit report.

Also keep in mind that, until your loan is closed, the deal isn’t done.  Complications with appraisals, home inspections, and titling – just to name a few – can still arise.  The best course of action is patience. Once you’ve signed all the paperwork and you know the house is yours, then it’s time to make it home. In general, the safest course of action is to avoid incurring new debt before closing.

We are aware that unexpected situations may occur, but before you go out and open a new credit line, contact your loan officer first to see what type of impact it may have on your loan approval.