Black Friday is nearly upon us. Newspaper inserts, emails and TV commercials abound with information about the “BEST DEALS EVER!”. You get to the store before the sun even thinks about coming up only to find that you can get an even better deal if you open a line of credit!
STOP RIGHT THERE.
If you are in the process of buying a home, or considering doing so anytime soon, we urge you to stop and collect your thoughts for a moment.
What the heck does Black Friday have to do with buying a home!?
That additional percentage off for opening a line of credit could be a deal-breaker when it comes to purchasing a home. If you are in the midst of the mortgage process with a good lender, you already know that you should hold off on opening new credit accounts during the home buying process. Even the smallest line of credit could jeopardize your mortgage process if your DTI (debt to income) ratio is close to being too high. It can also lower your credit score.
If you’re on the home stretch of your mortgage process (whether it’s buying a new home OR refinancing), you’re not in the clear just yet! Your lender will order a credit refresh. You may wonder: “Why is this necessary? I’ve already been pre-qualified.” A credit refresh does not generate a credit score. Your lender is simply looking to see if you have had any new credit inquiries that would indicate you’ve taken on additional debt. If you have inquires, expect to explain them. Again, if you are close on your DTI, this could affect the ability of you to close on your purchase or refinance.
A word to the wise with regard to Black Friday… if you’re in the process of buying a home or going to be soon, don’t open a line of credit to get that percentage off. Chances are, if you are shopping on “Black Friday”, you are getting a great deal anyway!
If you have further questions about DTI or credit scoring and how they relate to getting a mortgage, feel free to contact us.
We wish you successful (and responsible) shopping!