Mistakes when applying for a mortgage
Before looking for a house, you need to know the expenses that will come with the process. such costs include the price of the house, down payment, legal fees and other additional fees that may pop up. Most people when they don’t have enough money, then opt for a mortgage even though they know the stress of paperwork involved.
Qualifying for a mortgage has become more difficult thanks to the new regulations that require lenders to run a background check on the person before giving the loan. This will lead to a delay before you get an answer from the lenders. As a borrower, you ought to detach yourself from certain things that could sabotage your profile. This means that you will destroy your chances of getting the mortgage. The following are the things that could sabotage profile hence should be avoided at all costs.
No matter the type of loan, keep in mind that it will only increase your debt burden. This will automatically affect your chance of getting the mortgage. As part of mortgage approval, the lenders will have a look at the debt you have currently. they will compare recurring monthly against your income. This is known as DTI( debt-to-income ratio). If you have an existing loan, you should clear all of it before applying for a mortgage.
2. Job secureness
It’s not anyone’s wish to lose a job especially when you want to buy a house. But having a job or career switch could greatly affect your chance of getting a mortgage. Unless you are getting a job with higher pay, it is advisable to first hold your job switch. Note that a lender will look into your job history before approving you for the mortgage. This is because they want to know if you are in a position to pay the loan. Although you can have a conversation with your lender to discussions your sources of income, you must have worked for over two years for you to qualify for a loan.
3. Blowing all your savings
It is not a secret that you will encounter additional expenses in the process of getting your mortgage. You will be required to pay for the down payment, legal fees, appraisal, registration fees, valuation fees and other things that they will need you to pay for. This means that you have to set aside money cater for all these expenses.if not careful, this could drain you till your broke and have nothing left in your savings account. These would ruin your chance to get the mortgage because the lenders will want to see money in your savings account to prove that you can pay the mortgage.
4. Credit score
This will dictate your risk level to the lenders. It is the measure of the possibility of a person to pay back the loan. You can get a report about your credit score from different companies that provide full information about your score. Low credit score will make your chance of getting a mortgage loan stunt. If you have any loan, make sure you clear it before it dictates your credit score. In some cases, people are said to have existing loans from companies they don’t even know. Make sure you solve such issues before getting to the lenders.
5. Buying after loan approval
Even after your loan has been approved, the lender will still track on your spending before they send you the check. This is not the time to think of impulsive shopping. Take note that lenders will ask for a bank statement to see your spending. Aimless spending of money could lead to disapproval of your mortgage.
The above mistakes are very common, but also they are mistakes you can easily avoid. You just have to say no to those things that can affect your chance of getting the loan. All the best as you apply for that mortgage.