Tis the season for spending time with loved ones and spending money. If you’ve been working on improving your financial picture for homeownership, splurging during the holidays can potentially set your goal back. Here are some essential dos and don’ts to help keep you on track.
Don’t Put All Gifts on Credit (unless you pay it off at the end of the month)
Credit cards can be helpful when it comes to buying presents online. However, you could rack up debt with high-interest rates if you’re not careful. Many mortgage programs look at the debt-to-income ratio and your credit score. If you plan to use your credit card, you’ll want to pay it off at the end of the month to keep your credit card utilization low.
More Tips: Smart Ways to Use Credit Cards this Holiday Season
Do Create a Holiday Budget
To avoid overspending this holiday season, create a budget and stick to it. Budgeting can help you avoid being swept up by deals on presents that cost you later. If budgeting isn’t your cup of tea, apps like the Mint app can help. The Mint app offers help with budgeting, tracking goals, and credit score monitoring.
Don’t Take Out Loans for Big Ticket Items
It may be tempting to take a loan out to pay for furniture or appliances you’ll need for your new home during the holiday sales. However, loans can impact your credit score and DTI ratio. Rather than buying items for your new home before purchasing it, wait to buy big-ticket items until after your home purchase, when the next sale rolls around.
Do Check Your Credit Report for Errors
The holidays can be hectic, but you should still take time to check your credit report for errors sooner rather than later. If you do notice any errors, contact the credit bureau to find out the next steps and the processing time for any changes. This step allows you to enter the new year with confidence that your credit score is correct and there won’t be extra hiccups down the line.
Do Speak with a Mortgage Lender
It may seem like speaking with a mortgage lender is something you do after your credit score and financial picture improves. However, consulting with a lender at the beginning of your journey can help with your planning and make sure you’re taking all the right steps to prepare financially.
For example, lender can provide guidance as to which financial steps will have the most impact on improving your credit score so you can prioritize accordingly. Also, different mortgage programs have different guidelines and requirements so you’ll want to know where to set your goalpost. Plus you might be surprised to find out you already qualify for one of these loan programs.
About Julie Krumholz from Superior National Bank
Ready to start the homebuying process? Julie Krumholz from Superior National Bank can help!
Julie Krumholz has been helping homebuyers for over 30 years and has several loan programs available for various incomes and financial situations. She’s experienced nearly every facet of the mortgage industry, from processing, closing, loan origination, underwriting, QC auditing, and even co-owning a mortgage brokerage firm. Julie uses her experience to match homebuyers with the best mortgage program for their needs and helps simplify the mortgage process.
