Mortgage Mistakes To Avoid

There are a number of mistakes people should avoid making when planning to borrow money to purchase or refinance an existing home. In doing so, you’ll increase your chances of being approved for the best possible rate and avoid qualification or underwriting pitfalls.

1.  Avoid a bankruptcy or foreclosure. Either can haunt you and your credit score for years. And, of course, try to avoid any late mortgage payments.

2.  Not locking in your mortgage interest rate. Interest rates fluctuate. So, if you fail to lock it in — in writing — you run the risk of an unnecessary and avoidable increase.

3.  Not getting pre-approved before you start your home search.  Once you know how much home and what size mortgage you can afford based on your income, you can make the necessary decisions. Otherwise, you may be wasting your time and you may end up disappointed.

4.  Opening new credit cards or making large purchases on existing credit lines before or during the loan application process. This can hurt your credit score and increase your overall debt load, which could lead to revocation of your loan commitment letter or loan rejection.

5.  Applying for a mortgage loan with less than two years consecutive employment in the same occupation or field of business (unless you’re a recent grad with proof of future income.) You must be able to prove to the mortgage lender that you will continue to earn the income required to make the mortgage payments.

6. Applying for a mortgage without a year of documented housing history or your own verifiable assets covering at least two months of your proposed mortgage payment.  Mortgage lenders require proof that you paid rent on time and have enough in the bank to cover future payments.

7.  Not shopping around. By not taking the time or making the effort to comparison shop, you could be making a costly financial mistake. Invest the time to ensure you get the best mortgage lender that fits your needs and the best mortgage rate available.

With a little research and a large dose of common sense, you may be able to determine other pitfalls to avoid before you seek a mortgage. If  I can help, please call me today. I'm here to help.