Buying a house is one of the biggest decisions you can make, and it's a huge milestone in your life. And whether you're buying a house for the first time or the fifth, you want to make sure you don't accidentally sabotage your chances of getting the house you want.
And that's why it's so important to never apply for new debt when you're trying to close on a house!
Adding new debt when you're trying to buy a house is one of the biggest red flags in the real estate industry because it can wreck your chances of getting a mortgage.
Any new debt will increase your debt-to-income ratio, which is what lenders look at to determine whether they can give you a mortgage or not. When you increase the debt you hold, you increase that ratio. if the ratio goes above 35-40%, most lenders will not fund your mortgage.
Additionally, when you apply for new debt, whether it be a new car loan or a new credit card, it will show up on your credit report and lower your credit score. This is not what your lender wants to see and it will definitely increase your interest rates.
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