Typically, lenders always tell you to avoid making any large purchases when you're trying to acquire a home loan. A large purchase can result in an increase of debt, which can disqualify you for a loan. Even purchases in cash can be problematic because you may no longer have enough for the down payment or to cover issues that come up. Still, there are times when it's simply unavoidable. Your car could completely break down, or you could have a business expense.
Always Purchase in Cash If Possible
Say you need to purchase a car. You may be better off purchasing a temporary $2,000 vehicle than getting a loan for the same amount -- if you have the additional cash around. Simply spending a large amount of money won't usually harm you, it's taking out additional credit. Just don't spend so much that you don't have a buffer should you need to pay more for the property you're pursuing.
Pay Attention to Your Credit Report
When you do need to make a large purchase on some form of credit, you need to pay attention to the changes made to your credit report. Make sure that all of the related credit queries only count as one against your account, and make sure that there are no errors on the reporting of the new account that you've created. But regardless, be prepared to see your credit score take a significant hit. Credit scores are based not only on the amount you owe but also on the average length of your accounts and whether you've pursued credit recently.
Go For Installment Loans, Not Credit Lines
Installment loans are generally better for your credit than credit lines. Installment loans include personal loans, auto loans and -- of course -- home loans. So if you need a thousand dollars, it may be better to take a personal loan rather than to take out a cash advance on a credit card-- unless, of course, you will be able to pay the credit card back before the mortgage loan is finalized.
Obviously, it's always best if you can avoid making a large purchase on credit until after your mortgage loan is dispersed. Still, a mortgage process can take a long time and there are times when you have to spend the money. You may need to request a smaller loan or look for a less expensive house, or contact home loan company, like Dynamic Mortgage Concepts Inc, about other lending options for your situation.Share
19 May 2015
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