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Three tips for homebuyers during seasonal sales

Everyone loves a good sale, but make sure you don’t go crazy with holiday shopping – especially if you plan on buying a home or refinancing your loan.

After buyers have received a preapproval on their home loan, they must be cautious with their finances. If they go overboard with their shopping in the meantime, they could even kill the loan approval entirely.

Here are three tips to keep in mind:

Don’t apply for new credit or accumulate new debt. It’s tempting to apply for a new store credit card offering added discounts on top of sale prices, but just filling out an application could be risk. Opening a line of credit requires a credit inquiry, which could not only stall a mortgage loan application but also impact debt-to-income ratio. It could make a lender believe a borrower is a greater risk. Homebuyers need to avoid any major purchases, such as furniture or a car, before the home buying process is complete.

Don’t transfer large amounts of money. Homebuyers need to keep their money in one place as they await closing. Shuffling money between accounts can send red flags to lenders and make them concerned about undocumented funds or money troubles they may not have spotted beforehand.

Watch the gift money. If families are offering cash for holiday presents, buyers need to be aware that this may put their mortgage applications at risk. Lenders will be scrutinizing their accounts and looking for unusual deposits, such as those that are 50 percent or more of their monthly income. They are also looking for any unusual withdrawals. Buyers may need to be prepared to explain any large deposits or withdrawals.

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