If You’re Applying for a Mortgage, Avoid these Slip-ups
Purchasing a new home can be a very exciting time, but it can also be quite stressful. The mortgage application process is an involved one, and even seemingly small mistakes can throw a wrench into the works. Let’s take a look at six common mistakes you’ll definitely want to avoid when applying for a mortgage.
Not Monitoring Your Credit
Everybody knows that good credit is a great asset to have when applying for a mortgage. However, unexpected changes to your credit report can cause potential lenders to think twice about approving your application.
Through no fault of your own, your credit could end up taking a big hit. A creditor might make a reporting error, and credit fraud is a real-world problem that many people have had to deal with.
Because of this, you should probably monitor your credit rating all the time, but it’s doubly important when you’re applying for a mortgage. If erroneous information does show up in your credit file, you’ll be able to dispute it as soon as possible, mitigating any threat to your mortgage application approval.
A good mortgage specialist can also help you clean up your credit. The sooner you talk to a professional, the sooner you can get that credit cleaned up, and get yourself pre-approved.
Applying for New Credit Sources
You might think that new lines of credit would come in handy when you’re in the process of finding and purchasing a new home. After all, costs associated with the home buying process can add up quickly, and how much debt you’re carrying versus how much credit is available to you overall does factor into your credit score.
Applying for a new credit card can cause your credit to take a dip, especially if you are in the process of purchasing a new home. And don’t even think about buying a new car to match your new house. Wait until the deal is done, or you could end up without a mortgage, a house, or a driveway for that spiffy new car.
Disorganized Financial Documents
When considering your mortgage application, lenders will subject your personal finances to some pretty serious scrutiny. It’s in your best interest to keep all relevant financial documents organized and secure.
Start by purchasing a dedicated file tote, and fill it with folders for each category. That way, your bank statements, W-2 forms, tax returns, and other pertinent documents will be close at hand and easy to parse when the time comes.
Not Shopping Around Around for the Best Mortgage
Most of us wouldn’t buy a new television without reading a few reviews and checking around to see who has the best deal, but it’s shocking how many mortgage applicants don’t consider all of their options when applying for a mortgage. Sure, you’re comfortable with your bank and credit union, but that doesn’t mean they’re necessarily the best choice for your mortgage.
Often, and especially in Portland, sellers want to see that you are working with a local mortgage specialist from a boutique lending company. Sellers and their agents trust the local professionals, especially when they are looking at multiple offers in a bidding war.
Mortgage Application Inaccuracies
When you’re applying for a mortgage, it’s no time to guesstimate. Even seemingly inconsequential inaccuracies can derail your mortgage application, so it pays to be fastidious at every turn.
Make sure the information you’re providing is completely accurate, and don’t omit any pertinent financial details, even if they seem trivial. Did you cosign for a loan? Do you have additional income from a hobby or side job? Is there a divorce or bankruptcy in your distant past? Don’t leave those details out, or they may come back to haunt you.
Not Locking In Your Mortgage Rate
Okay, so you’ve found the home of your dreams, and your offer has been accepted. Congratulations! Of course, you’re not out of the woods just yet. At this point in the process, don’t forget to speak with your lender about locking in your interest rate. If you don’t get your rate locked in and the fed decides that the economy is ready for a rate hike, then you could end up paying a lot more over the course of your mortgage. Your lender should be able to help you find the best time to put that wonderful rate on lockdown.
Home, Sweet Home
If you manage to avoid these six potentially costly mistakes, then you’ll have a better chance of purchasing the home you want at a mortgage interest rate you’ll love. Once that’s out of the way, you’ll be able to get to the fun stuff, like choosing paint colors and making your new house into a home.
[Photo Via: Delaware Beach Property]