You found your dream castle, your house is under contract, and things are moving forward. You close on both homes in two months. You are going to have extra money after down payment on the new home. Perfect timing to spend that cash on new things for your new house, right? Well, you might not want to start charging those cards to the max just yet! Some things are "warning signs" that can hurt your credit scores and the interest rate of your new loan.
Here are a few things you DON'T want to do when applying for a loan
1. Do NOT apply for a new credit card. You walk into that furniture store and wow! That couch would go perfectly in the new house! A new home means you need a new couch! "Would you like to open a credit card with us and save 10% today?" It IS an expensive item so and you will have some extra cash to spend and pay it off in a few month so, sure! It is best to wait.
2. Do NOT pay off collections. This seems a bit contrary to what would seem to be something that would help your credit score, but believe it or not, it can actually hurt.
3. Do NOT change jobs. Even if it pays more, if you can, do not change jobs. Having a work history and stability for the prior two years is more desirable.
4. Do NOT co-sign on a debt for someone else. This will show as an additional debt for you and could affect your credit scores.
5. Do NOT miss a payment. You may not think it matters now since it will all be paid off in a few months, but just missing one payment can affect your credit score and loan rate.
As always, talk to your loan officer about any changes that you may want or need to make. If you have legal issues that may effect your credit score or loan rates (i.e. divorce), be sure to also speak with an attorney as well.
I am a real estate broker, attorney and mediator. I am blogging from my own ideas and perspective. Although I am a licensed attorney, these are not intended to be legal advise.