Do NOT buy furniture or anything else on credit, before you close on your Northeast Florida Home
You’re on the home stretch of buying your home, inspections done, repairs finished, and the house appraised at the contract price. Just got a couple more weeks before you get the keys to your dream home, but wait! Your living room suit doesn’t match your new home’s decor. You gotta have brand new furniture in time for your closing, so you run down to the furniture store.
You see the perfect living room set and you decide to buy it on credit. It looks so good in the showroom! Now, let’s fast forward another week, you get a call from your loan officer telling you that your loan has been denied. You can’t believe it, you have good credit! The reason: you bought your brand new furniture on credit, which caused your debt to income ratio to be out of whack. Or maybe your credit score was borderline and that credit inquiry brought it under. Now, your closing falls through, and you have brand new furniture, but not a new house to put them in.
True story. That’s what happened to very good friends of mine, but they were on the other end of the story. They were the sellers, who were selling their home. Their buyers bought new furniture on credit and the deal went south. Thankfully for my friends, they were able to get another offer soon after and close it.
Doesn’t have to be furniture though, can be anything involving a line of credit. A new credit card, a new car loan, loan for a boat, you get the picture. A good loan officer will tell you to not buy anything on credit, plus you should also be hearing it from your real estate agent as well.
I know it doesn’t sound fair or make sense for some, but the bank is protecting their interest and if you’re monthly debt is too close to your income, the bank is concerned if something happens, you won’t be able to make your payments.
So, what if you do need want new furniture? Wait until you close. Or even better, pay cash! Then you won’t have a payment to worry about. Now, what if you don’t have enough cash to pay get new furniture? Simple, don’t get new furniture! Save your money. I know what I’m about to write may tick some off, but be smarter than the sellers who have defaulted on their homes. I know there are some situations where, it was out of their hands (to a point), but many home owners were up to their eyes in debt and no savings for that rainy day.
So, what if the above story is you? Well, as disappointed as you may be feeling, you can fix it. Work on paying off any debt you have. As you pay off your debt, it should help raise your credit score and get your debt to income back in line. Time helps too.
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