Don’t Let Holiday Shopping Negatively Impact Your Ability to Buy a Home
It’s the time of year when the count down to the holidays is well underway. Everyone would agree this is an exciting time of the year filled with gratitude, gift exchanges and the celebration that only this time of year beholds. But don’t let your holiday shopping negatively impact your ability to buy your next home. If you’re a homebuyer this is the year you should keep a tight grip on your spending.
Beware of additional debt
• Once you have been pre-approved for a loan, any large credit purchases or changes in your debt can negatively impact your ability to secure that loan. Debt to income ratio is important. Do not charge up your credit card with gift purchases.
• The bank will check your credit situation when you place an offer on a house and it is accepted, basically before they proceed with processing your loan. They will recheck it again multiple times before closing on the home.
• Any increased debt affects your credit score. Your credit utilization ratio accounts for almost 30 percent of your credit score. This ratio is the amount of credit you’ve used compared to the total amount of credit you still have available on your credit cards. The lower your ratio, the higher your score will be. This score affects the interest rate you will pay on a new mortgage and if you qualify for the loan at all.
How to manage gift buying and house buying
Best advice is to rethink your level of gift giving this year. Plan on buying just one gift this year and let it be a new home for yourselves. If you just have to buy for others, at least keep it simple:
• Set a budget for holiday shopping and stick to it.
• Spend cash only – no credit cards.
• Those close to you will understand that you are under a strict budget this year due to house shopping.
• If your extended family is large, ask about everyone doing a Yankee swap or exchanging with just one other.
• Shop for sales and online deals that you can pick up in-store and save on shipping.
• Consider handmade gifts for those closest to you.
This year focus on what really matters most during the holiday season — family, friends and buying a new home!
All of us at Manhattan Real Estate would like to with you and yours a wonderful holiday!