Don’t Let It Happen To You! 5 Common Mistakes When Applying For A Home Loan
Buying a home is an important event in life, especially for first-time buyers. It is easy to get caught up in all the hype and get ahead of yourself. The whole process can be lengthy and many unseasoned potential buyers want to get through it as quickly as possible. Unfortunately, this can actually cause things to slow down – or even cause your mortgage application to be denied. There are a few common mistakes to avoid during the process.
Before you can even start the application process, you need to make sure you are properly prepared. Obtaining preapproval from lenders is part of this. It helps ensure that you are actually qualified for financing and can provide you with important information, such as how much lenders are willing to finance. Remember that prequalification is much different than preapproval. With prequalification you are only given estimates, but with preapproval you must provide financial information and other documentation that is used to preapprove your application. Ultimately, this helps you to choose a lender that offers you the best deal.
Last Minute Credit Changes
Many people think that paying off delinquent debts or credit accounts all at once is helpful in making them look more credit worthy. The truth is that this effort can actually hurt your chances of approval. In examining your credit history, lenders look for your payment history. It is better to pay your bills on time, regularly. This helps give you a better credit score and shows a lengthy payment history.
Applying with Only One
Like many other large purchases in life, you should apply with more than one mortgage lender. This gives you the ability to choose the best package and not be stuck with what one lender chooses to offer. Remember that there is more to a mortgage package than just the interest rate. You have the right to shop around.
Handling it All on Your Own
A big mistake you can make is trying to deal directly with mortgage lenders all on your own. It is likely that you will get lost in the process because you are unfamiliar with how to do things properly and the use of terminology gets confusing. Hiring a home loan banker service can help ensure everything is handled properly and help you understand the process. Mortgage services are highly advisable because they can apply to multiple lenders on your behalf and help break everything down so that you know what you are getting into.
Skimming the Documents
A mortgage agreement is a legal binding document. It will contain all of the terms of your mortgage, including a lot of fine print material. Do not simply flip through and skim the agreement. You must thoroughly read it. If necessary, have your lawyer read it and explain anything you do not understand before you sign it. It is vital that you ensure the agreement does not contain any predatory terms that set you up for failure before you even move into the home. Always ask questions about anything that appears off to you.
Applying for a mortgage and buying a home are big steps to take. Make sure that you are financially and physically ready. Avoid changing jobs before you apply and do not get any large credit items during the process. Keep your lifestyle the same and always be honest. It is important to remember that everything you put in your application has a paper trail that will be verified during processing.