Searching for the right home is already a challenge; going through the mortgage application is another one, that’s why it is best to best to be prepared to avoid financial missteps that would hinder you from securing a mortgage approval. Here’s a list of things you should avoid to ensure that you get that shining mortgage approval.
1. Having too much debt –You have too much debt if your bills are taking up a large portion of your income. Your debt-to-income ratio plays a big role when you are trying to get approved for a mortgage. The higher the ratio of your debt, the more it paints a dirty picture on your financial situation.
2. Declaring bankruptcy and foreclosure – Declaring bankruptcy puts a road block in your ability to borrow money. If you can, try to avoid bankruptcy or foreclosure because it will keep you out of the mortgage field for some years. After your bankruptcy is discharged, you still have to wait at least two years to apply for a mortgage loan.
3. Picking the wrong mortgage – You don’t want to be stuck with the wrong mortgage. You should do your homework and look for all options available for you. You should not only shop for homes but also shop with different lenders. Buyers who do not get the full picture of their mortgage options are costing themselves a lot of money.
4. Opening new credit cards – Opening up a new account or credit card can hurt your credit score because you will have zero history with that newly opened account. It will lower the average age of all your credit accounts.
5. Hopping between jobs – Having a steady employment and income can help you secure your mortgage application. Changing jobs before applying for a mortgage will not impress the lender.
6. Defaulting in the past – Your credit history is in important factor in getting a home loan. For your own sake, do not default. Pay your bills on time. And before you apply for a loan, check your credit report so you know if you are in good standing. You can get free credit reports from these credit bureaus: Equifax, TransUnion and Experian.
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Read more: How Much Can You Afford For a Home?
Looking to buy? Are you a first time home buyer? We can help! The J Michael Manley Team go above and beyond to help you find the perfect home, from searching the right property that meets your real estate needs until you finally sign the deal. We will walk you through the process and make sure that you get the best deal possible. Are you ready to find the right home?