Don't make major credit purchases before setting out to buy a home!

It's important not to make any major credit purchases if you are planning on buying a home soon. Why? It has a direct affect on how much home you can afford, that's why.

Most buyers are not aware of the impact of consumer credit purchases on home buying power, but here is the hard reality. Any new monthly payments you incur through credit purchases will decrease the size of loan you qualify for by a ratio of about 100:1.

Let's say you have a new car payment of $350/mo. The amount of money you are qualified to borrow from most lenders will be about $35,000 less (100 x $350) than what you might have been able to borrow without that car loan. The same goes for consumer spending like credit cards, department store cards, etc.

In general, it's always best to pay cash for items you need. Work to keep your monthly credit payments low, and you'll be rewarded in the long term.