Making a major purchase while trying to buy a home is one of the worst things you can do to your credit! Why? Because you will end up qualifying for less mortgage when you purchase a home.
What do I mean by a “major purchase?” Look at this list of major items to avoid:
Big Screen TVs’
Computer Sytems
Stereo or Surround Sytems
Electronics
Automobiles
Furniture
Appliances
Jewelry
Vacations
Wedding
While these items might not seem like a major purchase…they are. Big ticket items will reduce the amount of home loan you qualify for significantly. What you think you can afford in a home loan does not mean that the lender will be comfortable lending you that amount.
Purchasing a home is a major investment. It will be for many the most important investment they will ever make. Nobody wants to be told that the home they have fallen in love can’t be theirs because of the new car payment they have. Unfortunately, this happens quite often.
The lender you choose to work with will consider your ability to qualify for a home loan based on your debt-to-income ratio. That is the percentage of your gross monthly income that is reserved to pay for debt. This includes:
Mortgage: Principal, Interest, Taxes, and Insurance, Homeowners Association Fees, if applicable
Student Loans
Car Payments
Credit Card Debt
etc.
