If you’re in the market to buy a home, and if you’re planning to purchase the home with a mortgage, there are a few things you should know. First, a home is an expensive purchase – and being approved for a mortgage is much more complex than being approved for a credit card with a credit limit of a few thousand dollars. Second, the process of applying for a mortgage and getting the mortgage approved and closed is a lengthy process. And third, the mortgage broker or mortgage banker you use to help you with your loan DOES matter.
Following are a few common mistakes that potential homebuyers often make when they are hoping to purchase a home with a mortgage:
Not using an experienced mortgage broker or mortgage lender. When you use a mortgage broker or mortgage banker, you want that person to be professional and experienced. If the broker or banker is unreliable or disorganized, your loan might not close – which could result in your losing the house you want to purchase. Therefore, make sure the mortgage broker or mortgage banker you choose comes highly recommended or is able to provide excellent references or client testimonials.
Assuming you will qualify for a loan, but neglecting to get pre-qualified or pre-approved for a loan before you start home shopping. It’s not uncommon for people to think they will qualify for a mortgage with a certain dollar amount – only to find out they don’t. Before setting your sights on a home that is ultimately out of your price range, take the time to get pre-qualified or pre-approved so you know where you stand.
Knowing how much debt you have. It’s not uncommon for people to not know the balance of their outstanding debt. They know they have debt, and they make their monthly payments on time, but they don’t know exactly how much debt they have in total. If you are seeking a mortgage, the lender will take into consideration your debt to income ratio (“DTI”). If your ratio is too high, you may not qualify for as large a mortgage as you want, or the interest rate you are offered might be higher than you’d expect.
Not having proof of a stable job. No matter if you are self-employed or if you work for an employer, mortgage lenders want to see proof that you have a history of stable employment. Lenders want to make sure you have the capability of maintaining a job – which is a good indication to them that you’ll be able to make your monthly mortgage payment on time.
For more advice on how to avoid common mistakes when applying for a loan, call The Home Loan Arranger today at (877) 938-7501.