Knowing some of the common mishaps, and how to avoid them, can speed up the process and increase your chances of approval.
Let’s take a look at how the different housing market elements affect each other to determine your overall buying power.
1. Late or missing documents
Before and during the mortgage application process, your lender will ask for several forms of documentation.So, it is crucial to stay in touch with your lender throughout the process.
Also, make sure to promptly provide information when it is requested. Since the mortgage loan process can be complicated, keeping up with your lender’s requests will ensure that your loan closes as soon as possible.
2. Ignoring Credit History
Checking your credit history before searching for a home is crucial. If there is anything wrong, you need to work on fixing it before you try to get a loan and purchase a home. There are several sites that allow you to check your credit history for free.
Also, your mortgage broker can help explain things, such as how your credit score and history will affect the mortgage rate you qualify for, and how to earn various types of mortgages. They are there to help!
3. Changing or quitting your job before closing
What are major qualifying indicators to getting a mortgage? Your employment and income. Ideally, lenders like to see consistency over the past two years. Quitting your job during the application process, even if it is a positive change, can throw a wrench in the entire process.
Your income helps you decide how much of a loan you qualify for. If your income changes, the lender will need to reevaluate your mortgage application. This could seriously delay your closing.
4. Applying for or closing credit accounts
It’s easy to get caught up in the excitement of buying a new home. This can lead to making big purchases or even applying for a new line of credit. But, be careful! If you make a large purchase on credit, or close an existing credit line, it may impact your ability to close on a home purchase.
Often, lenders will take a final look at your credit right before closing. Any new credit information may cause temporary or even permanent delay on your loan. So, wait on the large purchases until after closing.
5. Limiting your options
Make sure to take the time and shop around for your home mortgage. That way, you won’t end up paying more interest and fees than necessary. Luckily, great mortgage brokers will take care of this for you, and present the best rates for you. Then, you can be sure you aren’t missing out on better terms.
During the mortgage application process, understanding a few “dos” and “don’ts” can help you avoid costly mistakes. Also, don’t be afraid to ask your lender questions to ensure a smooth process throughout.