Getting the mortgage approval for buying a home is not only stressful but complicated too. The lender does a complete scrutiny of your financial background and asks lots of questions. There is a lot of paperwork to be done in the process too. A lot of things can go wrong during this approval procedure and screw up the deal.
Here are five things that you should avoid while applying for the mortgage.
1# Hiding Financial Information
The lender examines your current and past financial records. They perform verifications of your important fiscal documents. So, don’t even think of hiding anything let alone putting any misleading information on the application because it’s a felony and you can be accused of mortgage fraud. If you are struggling financially or have any stint on your records, discuss them with your agent and let the lender know.
2# Waiting for the 20% Down Payment
It’s true that paying 20% of the total home price as the down payment will give you some perks – you don’t have to pay any extra monthly fee and avoid paying PMI (private mortgage insurance). But, you should not wait for collecting the 20% down payment if the mortgage rate is low. The rate can go up a couple of years later, causing the home prices to increase too.
3# Forgetting to Pay the Bills
At least, for the last six months before applying for the loan. Sometimes, you may forget to pay one or two bills here and there, which is not a big deal. But, don’t let it happen before filing the application. Keep a track of your bills and pay them on time. This consistency will show up on your credit report and convince the lender of your reliability as the loan receiver.
4# Not Shopping for the Mortgage
Just like you can go through several listings and pinpoint your choices on a particular property that meets your requirements, you can also shop for the mortgage and compare several lenders. Most people choose the first lender they meet but that is a mistake.
The truth is the offers and interest rates vary from one lender to another. When you don’t compare apples-to-apples, you may end up paying more the house than you need to, bringing financial woes and stress upon yourself.
5# Applying for a New Credit Card
It will show up in your credit inquiries and cut up to five points from the credit score. Some buyers may argue that it is necessary since they need to buy stuff for their new home. However, applying for several new credit cards and multiple lines of credit will add debts to your credit history. A lender may think that you don’t have enough money to purchase a home; thereby, desperately trying to borrow some money. It may lead to the disapproval of the loan.