Why You Shouldn’t Buy ANYTHING with Cash or Credit During Your Contract Period

Purchasing a new home in Houston can be an incredibly exciting milestone in life! During this thrilling journey, however, it is crucial to remain calm and make informed decisions that won’t jeopardize your path to homeownership. One key piece of advice from Angel Fultz Realty to Houston homebuyers is to avoid spending cash or credit during the real estate contract period. Don’t buy a new couch for your house, don’t buy a new car for the garage, and don’t hire a landscaper to renovate the back yard until your contract period is over! 

This might not sound too serious, but it is. If you start spending your cash or credit during your contract period, you’re jeopardizing your entire home purchase! Do NOT buy anything you don’t HAVE to. This simple but vital precaution can prevent the risk of disqualification from the home mortgage loan for which you have already been approved.

The Importance of Mortgage Approval in Houston

Mortgage approval is the green light that empowers nearly all homebuyers in Houston to finance their home purchases. Very few homebuyers can afford a house in Houston without a lender’s approval. This essential step within the home-buying process relies heavily on the buyer’s financial stability. Banks and other lenders carefully evaluate factors such as credit scores, debt-to-income ratios, and overall financial liquidity to determine whether or not you will get a loan. 

Essentially, lenders want to know that if something goes wrong with your house, you can afford to fix it and maintain your mortgage lender’s investment. If you start spending cash or credit after you’ve been approved for the loan but before the purchase is complete, you change the lender’s math and could disqualify yourself! 

Hazards of Cash or Credit Spending During the Contract Period

The contract period, which lasts from signing the purchase agreement to closing the deal, is a critical time in the real estate transaction. Any changes to your financial situation during this phase can adversely affect your mortgage approval.

By making cash or credit purchases during the contract period, homebuyers risk:

1. Increased debt-to-income ratios: Significant cash or credit spending could raise your debt-to-income ratio, making lenders view you as a higher risk for defaulting on the loan.
2. Lower credit scores: Opening new lines of credit, utilizing more of your available credit, or missing payments due to unexpected financial strains can cause your credit score to drop.
3. Mortgage disqualification: Changes to your financial standing can lead to the rejection of your mortgage application, thwarting your homeownership dreams.

Adopting Smart Practices

To secure a successful home purchase, Angel Fultz Realty recommends the following prudent measures:

• Refrain from making significant purchases or opening new lines of credit during the contract period.
• Communicate with your real estate agent and mortgage lender about your financial situation and any potential large expenses.
• Prioritize your budget, focusing on essential expenditures and minimizing discretionary spending.

Trust Angel Fultz Realty to Guide You

Navigating the complex Houston real estate market requires not only expertise but also a calm and steady demeanor that will not be rattled by any hiccups. Angel Fultz Realty is here to guide you through every step of the process, with tailored advice and solutions for your unique needs. Our commitment is to help you succeed in achieving your homeownership goals.

Embarking on your home-buying journey? Trust Angel Fultz Realty for expert guidance and support.Contact us today to discuss your vision of the perfect Houston home.