The rise of “buy now, pay later” services like Klarna, Afterpay, and Affirm has been met with mixed reactions. While some consumers find them convenient and flexible, others have expressed concerns about the potential pitfalls of using these services. Recently, a mortgage lender named Tori took to TikTok to share her perspective on the matter, warning potential homebuyers about the dangers of using such services when applying for big loans like mortgages.
In her video, Tori emphasized that lenders and underwriters view these short-term installment loans as recurring payments on bank statements. This can complicate the mortgage application process, as lenders need to source the terms and information about these loans. Unfortunately, Tori pointed out that these “buy now, pay later” services don’t make it easy for borrowers to access this crucial information, making it more challenging for lenders to assess their creditworthiness accurately.
Tori’s advice to viewers was straightforward: “Please stop using them when you’re trying to buy a house.” Her message resonated with many TikTok users, with some expressing their intentions to avoid using these services altogether, especially if they had plans to purchase a home. This sentiment was echoed by another viewer who shared their own negative experience, while another TikTokker implied that these services might be one of the reasons people are hesitant to invest in real estate.
The reactions to Tori’s video highlight the ongoing debate surrounding the use of “buy now, pay later” services for significant financial commitments like mortgages. One viewer questioned why someone would choose to use an app instead of speaking to a person when applying for a massive loan. This sentiment suggests that many still value the personal touch and reassurance that traditional lenders provide, even in an increasingly digital age.
While it’s essential to consider alternative payment options and adapt to the changing financial landscape, Tori’s warning underscores the importance of approaching such tools with caution when it comes to big financial decisions like buying a house. The potential consequences of overlooking or underestimating the impact of recurring payments from these services during the mortgage application process should not be taken lightly.
Ultimately, whether to use “buy now, pay later” services when purchasing a home is a personal decision that should be made after careful consideration of one’s financial situation, goals, and the potential consequences. As with any financial product, doing thorough research, seeking professional advice, and proceeding with caution are crucial steps to ensure a smooth home buying journey.