It is not a simple task getting a mortgage in any part of the US today. This is a time consuming and complex process. Perhaps, this is considered as one of the important events when it comes to financial terms. Here are the ten most important mortgage mistakes to avoid;
• Without proper checking of your credit
Before looking for a mortgage, you have to consider first your credit score standing. After all, having a bad credit score can increase the interest rate of your mortgage or maybe no approval will take place. Make sure to examine your credit early before getting a loan in case there are changes needed.
• Applying for the new credit next to the mortgage
Do not apply for any kind of credit during and before the mortgage application procedure. When you apply for the new credit, you have a greater risk. Also, if you apply for an auto loan or perhaps a credit card at the same time that you have applied for a mortgage, your credit score might bump or dinged the interest rate.
• Failure to look at the total housing payment
Mortgage payments are composed of insurance, principal, interest, and taxes. Most home buyers often neglect to examine the overall cost of housing payments. They do not know that this is a very important task to consider since this is one of the mortgage mistakes that should be avoided.
• No seasoned assets
The lender or perhaps the bank wanted that you can pay your mortgage every month. However, if you have no seasoned assets or perhaps money in your account for several months, you won’t be lucky enough. Several borrowers believe they can actually transfer funds from their relative’s bank account before applying for a mortgage. However, this will not take effect once the underwriter revealed the records.
• No permanent job
One factor for a mortgage approval in the USA is a steady and permanent job and income. The underwriter wants to know the consistency of your monthly income and your foreseeable future. So, for an immediate approval of your mortgage, do not jump from job to another job.
• Did not get pre-approved
The major key for a good mortgage is by getting pre-approved. Before home shopping, be sure you qualify for the financing by getting pre-approved. Pre-approval of the mortgage is stronger compared to the pre-qualification. This is because the bank or the lending institution pulls out your credit and examine your source of income, employment, and assets. The debt-to-income ratio also plays an important role to know if you can afford or not. With pre-approval, you will obtain a written commitment coming from the bank or lender that shows to home sellers that you are serious to buy.
• Did not shop around
Being pre-approved from one bank, does not mean you can now get a financing. You need to shop around with some other banks or lending institutions. You need also to think about the mortgage broker. The broker can help you shop the best rate from many banks and can get the lowest rate and best terms.
• Looking for exotic loan programs
Look for the lowest closing costs and rate but not on your mortgage expenses. If it has a low payment, your mortgage balance will have a tendency to increase every month. It is best to look for a simple loan program like fixed rate mortgage.
• Forget to lock the mortgage rate
It is best that your mortgage rate must be locked. So, in case you are contented with your rate, then lock it. The rate of the mortgage changes every day. Sometimes, several times a day. Those mortgage quotes you get are just normal quotes until you informed the bank or broker to lock it. Once your rate is locked, you are assured for a definite period of time, be it 7 days, 15 days, or even months. Be sure to lock your rate in writing and don’t just assume it.
• Without reviewing of loan documents
By reading and reviewing your mortgage documents, is not only a responsibility but can help you understand about the process. It is true that is difficult to read all the pages in the documents prior to signing but it is much difficult if you just sign without reading through all the details.
By familiarizing yourself with all these common mortgage mistakes, these can help you better understanding about the process and how to avoid it.