Next up is getting a mortgage and that may not be as easy as you anticipate. Just as you spent hours planning your house search and successfully executing the plan, now you should do the same when you attempt to obtain your mortgage.
Some homeowners can become frustrated by this process but with good planning—again–you can avoid the following four mortgage mistakes.
Failing to obtain either pre-qualified or pre-approval
Going through a free, pre-qualification to determine your price limit prior to house hunting is helpful. This will not guarantee a mortgage approval, but it can paint a picture of the loan you may qualify for based on your assets, income and plans for a down payment.
The pre-approval process, which may or may not incur a fee, is more similar to the actual mortgage application process. Through pre-approvals, you’ll give a loan officer the requisite information for your mortgage application. This can include bank statements, W-2s, and pay-stubs.
Take a more is better approach and submit as much documentation as possible.
In addition, the lender will also conduct a credit check, giving you an idea of whether or not you’ll be approved for a mortgage (see below to make this a smoother process).
If you get denied, use this credit check to identify your weaknesses. When you’re ready to reapply, you should be better prepared.
You should always be paying attention to your credit score but even more so during this time of house hunting. By reviewing your credit report, you should look for discrepancies that may cause future problems. This includes looking at a potential history of late payments, collections or defaults.
If there are errors, try to fix them.
Should these credit imperfections have occurred during a key point in your life such as unemployment, an illness or a divorce but your current credit appears good, you may think about writing a letter to the lender, discussing this frustrating time and hope he will take this into consideration.
Not Being Financially Conservative
During the time as your financial background will be heavily scrutinized, you’ll need to put yourself in financial lockdown. This means not utilizing your credit cards, making large purchases or seeking an additional loan or new credit card. This may cause some frustration but keep in mind with your financial background being closely monitored, now is not the time to add blemishes.
Any irregular behavior will be noted and you’ll need to explain them.
Stay status quo (don’t be tempted by that new TV for your den) and remember that a mortgage application process doesn’t take too long. Patience will now be vital.
This one may surprise you but try not to voluntarily get a new job. You may want to think about the benefits of either doing so or not as this action will come under review.
Why? One’s length of employment is one of the many factors reviewed for a mortgage. Maybe you were at your last job for eight years but now you’re on a probationary period. A lender may see this as a risk.
Keep in mind, it may not disallow you from receiving a mortgage, possibly if it’s in your current field, but be sure to ask about it, erring on the side of caution.
By planning ahead, you can help the mortgage approval process be more of a breeze than a frustrating one. Before you speak to your loan officer—or even begin house hunting—have a clear as possible financial picture.
Before you know it, you’ll have your mortgage and then you can start worrying about your move.
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