Can I Buy Furniture a Day Before Closing on a House? What You Need to Know

It’s exciting to buy a new home. After months of looking, paperwork, and waiting, the closing date is almost here. It’s tempting to want to buy new furniture and decorations as soon as you move into your new home. However, experts say that you shouldn’t make any big purchases until after you close, even if it’s just a day before. Don’t do these things yet. Instead, do these things to get your home ready to move into.

Why You Should Avoid Major Purchases Right Before Closing

When you’re in the homebuying process, lenders will monitor your credit and finances closely. Their goal is to ensure you remain qualified for the mortgage loan through closing day. Even with excellent credit, one small change can drop your credit score enough to impact your interest rate or loan approval.

According to Bankrate, even furniture or appliances – basically anything you might pay for in installments – is best to delay until after you finalize your mortgage. Depending on your credit score and history, these transactions can lower your score, which can impact the interest rate and loan amount you receive

Here are some of the main reasons to avoid major purchases right before closing:

• In the beginning, when you apply for new credit, like a credit card or financing for furniture, the hard inquiry will cause your score to drop a few points. If the purchase amount is big compared to the amount of credit you have available, it can also raise your credit utilization ratio, which can lower your score even more. Lenders check your credit again right before the closing, so even a small drop can change the terms of your loan.

• Lenders figure out your DTI by dividing your total monthly debt payments by your gross monthly income. This can change your DTI. If you take on more debt, the amount you owe each month goes up, which throws off this careful math. If your DTI is too high, you might not be able to get a mortgage loan.

• You may have to provide extra documentation: If you make a big purchase that requires financing, your lender will likely ask for documentation about the new account and debt. Providing this paperwork can delay closing or complicate the underwriting process.

• It shows instability: one of the main things lenders look at is how well you can handle your credit over time. If you’re making a big purchase, it means you might be borrowing too much money. So even if you say you’ll pay it off right away, the lender can’t be sure you will.

Bottom line – avoid applying for or taking on new lines of credit in the final weeks before your closing date. Wait until you have the keys in hand to celebrate with new furniture or decor.

What You Can Do Instead to Prepare Your New Home

While you should hold off on major upgrades, there are still steps you can take to get your new place move-in ready:

• Declutter and organize: Sort through your current belongings and pare down items you no longer need. This will make packing easier and ensure you don’t bring unnecessary things into your new home.

• Pack gradually: Start packing non-essentials a few weeks in advance. Having this done ahead of time prevents last-minute stress. Just be sure to keep daily necessities handy.

• Clean thoroughly: Scrub down your current place so it’s ready to show or hand over to the new owner. Then do a deep clean of the new house before moving your things in.

• Make minor cosmetic fixes: Instead of brand new furniture, focus on small updates like a fresh coat of paint, new light fixtures, or inexpensive window treatments. These easy fixes make the new place feel like your own.

• Rent appliances short-term: Rather than purchasing new appliances, consider renting any you need for the move-in period. You can then buy later on with no credit impact.

• Purchase essentials with cash or debit: Stick to essentials like cleaning supplies, towels, or bedding that you can pay for with cash or debit. Just avoid financing home-related purchases.

How Long Should You Wait After Closing to Make Major Purchases?

As soon as you get through closing and receive the keys to your new home, you’re likely eager to start personalizing it. Experts recommend waiting at least one or two months after your closing date before making any large credit purchases.

Here are some tips on timing for post-close spending:

• Give your mortgage loan a chance to officially record and fund, which can take up to a month after closing day. This ensures the lender can’t challenge the transaction.

• Let your credit score rebound after the hard inquiries from applying for the mortgage. It will gradually recover over the two months after closing.

• Build up your savings again after closing costs and the down payment. This gives you a buffer in case of financial changes after buying the home.

• Get familiar with the home before making decor decisions. Live in the space for a few weeks to identify problem areas or determine your style.

• Research financing options thoroughly before applying for credit. Compare interest rates and terms from various vendors to get the best deal after the waiting period.

While it requires patience, holding off for at least one or two billing cycles to make major purchases can save you money and prevent complications. The delay is worthwhile to ensure your home loan and credit score remain in excellent standing.

Final Tips for Managing Your Finances Through the Homebuying Process

1. Stick to a budget and only spend what you can afford in cash while waiting to close. Avoid financing big-ticket purchases.

2. If you have extra funds, consider prepaying a few months of utilities at your new home to avoid new accounts.

3. Resist the urge to “just browse” at furniture stores. Seeing items you love but can’t yet buy will only tempt impulse purchases.

4. Limit credit card spending to basic necessities only and pay balances off in full every month.

5. Contact your loan officer before applying for new credit or making large purchases to understand the potential impact.

6. Be diligent about paying all bills on time to protect your credit score. Consider enrolling in autopay if that helps.

7. Provide requested paperwork to your lender promptly to keep the underwriting process moving smoothly.

8. Celebrate your new home after closing with fun activities like unpacking, decorating, or hosting a housewarming party. Save major furniture splurges for later.

The weeks leading up to your home closing require financial restraint and patience. But the payoff is well worth it once you finalize the purchase and can begin making your new house a home. Avoiding major purchases until after you close protects your credit score, interest rate, and loan eligibility so you can focus on the excitement of moving in.