Avoid these mistakes when applying for a mortgage. Applying for a mortgage can be a drawn-out process requiring a lot of paperwork and time to complete. You can however minimize the headache by making sure a few things are in check.
Rates
In today’s rising rate environment, it becomes necessary to shop for the best rates and terms. Don’t make the mistake of settling for the first offer that you receive. As with most things, shopping around can save you a lot of money.
Often, online banks may offer better rates than traditional bank. A credit union can also be a good option. There are several online tools to help you compare rates.
Spending
Don’t make the mistake of running up credit card balances or taking on new debt during the loan approval process. Applying for a mortgage can take 30 days or more. It makes sense that when a new home is about to be closed on that the soon-to-be owners will be looking to buy furniture and possibly materials for updates and remodeling.
While some spending associated with a new home purchase will be unavoidable, you need to watch excessive spending during the loan application process. Running up too much debt could affect your credit score and might cause your mortgage application to be denied.
A better strategy is to either wait until after closing to spend on new home necessities or to preplan by saving up extra cash beforehand.
Life Changes
It is a good idea to not make any major life changes during a mortgage approval process. You shouldn’t switch careers or move around large amounts of money if you can help it.
Your lender will want proof of employment and employment history. Switching jobs in the middle of the approval process could jeopardize your loan.
They say cash is king but using large amounts of cash as part of a down payment could be a red flag. Your lender will want a record of where funds are coming from. Using cash is fine, but it will need to be withdrawn from an account and have traceability. Pulling money from a safe may not be acceptable.
Conclusion
By keeping note of the above rules, you can avoid these mistakes when applying for a mortgage. Buying a home is a major endeavor and can be exciting. Just make sure to keep things in check until after you close.
Read Also:
Credit Score Needed for a Mortgage
How Are You Dealing With Inflation?
What to Do If You Inherit an Estate
Writer and Investor. Based in the Pittsburgh, PA area, Brian holds full-time employment as a Warehouse Manager for an electronics firm. Brian enjoys wealth building, investing, gardening and the great outdoors. Brian holds a B.A. in Environmental Studies from the University of Pittsburgh and an MBA from Robert Morris University.