Hi all! I have saved up funds for buying my first home and plan to start looking for a home in May when my workload lessens. I have a 20% down payment, 8 months of expenses in an emergency fund, and another 10% saved for closing costs, moving, initial purchases, etc.
Unfortunately, one of my cats has had a slew of medical issues and I need to pay about $4,000 for an endoscopy that I am trying to decide how best to schedule (it can wait but probably not for as long as it takes to buy a house).
My question is, I know you should avoid large purchases before closing, but will it be a concern if I have a large expense immediately before submitting pre-approval applications and beginning the process?
I will use a credit card but pay the balance in full, as always. I will have to take funds out of my savings in the short term to cover it, but I have more I need for the down payment and closing as is.
Thanks!
Big purchase before applying for a mortgage
byu/reasonable_re inpersonalfinance
Posted by reasonable_re
7 Comments
Honestly just pay for the cat’s procedure now before you start the mortgage process. As long as you’re paying the balance in full and your savings still cover the down payment it shouldn’t matter much for pre-approval
I think the biggest concern is debt. If you don’t need the $4k to pay towards the house, I don’t think it’d make a different to the bank. If you take it out as a loan/payment plan, you’ll just be able to qualify for $4k less in home.
Buying a house is a roller coaster. Just live your life and do what you need to do. I’ve learned “it’s never a good time”, for anything, something always comes up.
if you haven’t started applying yet, then you should be OK. It may affect the rate you get, but so be it
once you apply, my first mortgage broker basically told/threatened us to not make any major purchases, even appliances for the house, until we closed. We ended up buying them the day we closed, and then moved in the next day
So you are NOT in the mortgage process now? You will start looking?
Charge away. Just pay it off, once you have signed a contract to buy and you begin the mortgage process the mortgage companies get really weird about debt.
I can tell you horror stories of people who put down earnest money for million dollar homes, only to be old they needed to pay off their $50 target bill, they just charged for incidentals on the new house, before they can be approved.
As long as you’re not using the funds you saved up for the down payment, you’re good. I just spent $23k (bought a car in cash) and it did not affect my pre approval, I consulted my mortgage lender before making the purchase to make sure 🙂
> know you should avoid large purchases before closing
Not a thing. You need to avoid new debt
Purchases are irrelevant