How Changes In Your Credit Could Affect Your Ability To Buy A House

If you make an offer to buy a house and the seller accepts it, you will soon be able to close on the house and move in; however, you should understand that your lender may decide not to give you a loan even if you had received a pre-approval months ago. Here are a few things to know about your credit and financial state when buying a house.

Lenders pre-approve applicants by examining their current situations

Before you started house shopping, your real estate agent probably told you to get pre-approved for a loan first. This is an important step when buying a house, and many agents will not even show homes to people until this happens. When you apply for this with a lender, the lender will base the decision on your current financial state. If you qualify for a loan when you apply for the pre-approval, you may get approved; however, this does not guarantee you will end up getting a loan from this lender.

Lenders make a habit of checking credit scores of pre-approved individuals

After a lender pre-approves you, the lender will not just push your paperwork aside and forget about it. Instead, the lender may continue to monitor your credit until you actually choose a house and close on it. During this time, you might end up doing things that could cause you to no longer qualify for the loan. Because of this, it's important to understand what types of information lenders view as red flags so you can avoid doing things that could impede your ability to qualify for a loan.

Things that can cause you to lose the loan

Lenders look at several things, but here are some key things that could trigger a lender to change their mind:

  • New purchases – If you buy a new asset that is costly, you may now have more payments to make each month, and this could push you to the point where you might not be able to afford a mortgage payment.
  • Delinquencies – Lenders also consider delinquencies on credit reports red flags. If you forget to pay your bills, or if a creditor puts a judgement on your credit report, you may no longer qualify for a loan.

If you do not want to forfeit your ability to buy a house once you find the right one, you will need to avoid doing anything that could harm your credit. If you are pre-approved right now and want to find the perfect home for your family, contact a real estate agency in your city. Talk with a real estate agent today about the homes for sale in your area.