Getting a mortgage can be a long, arduous process, but certain mortgage mistakes are easily avoidable and can improve your chance of getting one.
Keep in mind that securing a mortgage is time-consuming and quite significant when it comes to your financial status, so make sure that you avoid the following mortgage mistakes.
Mortgage mistakes to avoid #1
Not getting a credit check
You should get a credit check done months before you even apply for a mortgage to make sure that your credit is copacetic and that you can repair any issues that might come to the surface once you receive your credit score.
The last thing you want is to have your mortgage interest rate spike up or fail to secure a mortgage because you forgot about a credit card that you have owed $113 on for the last 8 months.
Mortgage mistakes to avoid #2
Getting too many credit checks
In the same vein, getting too many credit checks done by varying banks can harm your credit score, as it means that many people are questioning your credit, which reflects badly on you.
Shopping around for the best mortgage is a great idea, but it shouldn’t be done at the expense of your credit rating.
Mortgage mistakes to avoid #3
Applying for credit
When you apply for a mortgage, simultaneously applying for any credit is a terrible idea. That means that your potential for debt is higher and that you are more of a risk. And what does all that mean? It means that no one will have any confidence that you can pay the mortgage off.
Do not apply for any new credit and for the love of money, don’t rack up any expenses on your current credit status. The big screen can wait until after you have secured your mortgage.
Mortgage mistakes to avoid #4
Not considering payments that come with the home
A mortgage payment consists of PITI, that is principal, interest, taxes, and insurance. Many prospective homebuyers make the mistake of not factoring property taxes and insurance costs into the overall budget of a home purchase.
Before you make the assumption that your mortgage is sufficient, look into what the monthly costs of owning a home will really cost.
Mortgage mistakes to avoid #5
It’s a well-known fact that job hopping sets off all kinds of alarm bells for lenders, as it indicates that you are not steadily employed and may even end up unemployed and unable to pay back your debts at some point.
Keeping the same job for at least a year is super important when applying for a mortgage, as it demonstrates that you have a steady income.
Mortgage mistakes to avoid #6
Not considering pre-approval
Before you begin shopping around for a home you like, you should get a pre-approval for a mortgage so that you are aware of exactly how much you can afford and what kind of home fits your price range.
Once you get your pre-approval, you will also receive, in writing, a commitment from the lender that you can then use to show home sellers that you are serious about purchasing a home.
Mortgage mistakes to avoid #7
Heading to your bank only
Too often, folks head straight to the bank they have been doing business with their entire lives for a mortgage, without considering any other options. Just because you have all your money matters handled there, that doesn’t mean that they will give you the best rate.
Your best bet would be to make an appointment with a mortgage broker, who will do the shopping around for you and find you the best rate – all this with only one credit check.
Mortgage mistakes to avoid #8
Not locking your rate
Mortgage rates are ever-changing so not locking your rate when you get a sweet deal is a bad move. Even if you’re hearing quotes you love from mortgage lenders, unless you indicate that you want to lock it in, the rates essentially means nothing.
Once locked, your rate is guaranteed for a given time, decided upon by the lender. Remember to get it in writing.
Mortgage mistakes to avoid #9
Not reading the fine print
It is up to you to read the fine print of your mortgage contract and ensure that you understand and accept the terms. Take the time to make sure you understand everything and ask as many questions as you can to make sure you comprehend what you’re about to sign.
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