If you're like most first-time home buyers, you probably need a mortgage loan in order to complete your purchase. The things you do in the months before you begin your home search can make a big difference in whether you are approved for a mortgage, as well as in the interest rate you are offered. If you plan on buying your first home soon, avoid these common mistakes:
Not Checking Your Credit Report
Your credit report plays a major role in the mortgage process. The information on the report will be reviewed, and your credit score will be considered when a lending institution is processing your mortgage application. Before you submit any information to a lender, make sure you carefully look over your credit report. If you see any errors, contact the credit reporting agency to have them fixed. It is also a good idea to pay down any debt that is being reported on your credit report.
Making Large Purchases
When you need a mortgage loan, the key is to reduce debt, not take on new debt. Prior to getting a mortgage, it is in your best interest to avoid financing any large purchases, such as an automobile. You should also refrain from making big purchases on your credit card. Save these purchases for after being approved for a mortgage and actually closing on your first home. In addition, do not open up any new credit card accounts or other lines of credit.
Not Getting Pre-Approved
Being pre-qualified for a mortgage is not the same thing as being pre-approved for a mortgage. Before you begin searching for your first home, it is important to be pre-approved for a mortgage. This means that all of your financial information has been reviewed and gone through underwriting, and you have been formally offered a loan. Being pre-qualified just means that a financial institution thinks that you're a good candidate for a mortgage and they may be interested in lending to you-- but there are no guarantees.
Job Changes
If you plan to get a mortgage soon and begin looking for a house, it is important to not make any changes to your employment status. Even if you hate your job and want to move to a new company, stick around in the same position at the same rate of pay until your mortgage is approved and you close on your house. Changing jobs during the mortgage process may put your loan at risk.
Contact a mortgage company in your area for additional info.
Share1 September 2016
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