Getting a mortgage is a big deal; it is a long-term financial commitment. As a result, it is essential to carefully go through all your options before committing. Many people make mistakes when taking a mortgage for the first time. However, with the right information, these mistakes can be avoided.
Let’s take a look at some common mistakes made when getting a mortgage so that you can make the right decision to get a good deal.
- Being untruthful or secretive on the application
Providing incorrect or incomplete information on your mortgage application can backfire. In this regard, the most commonly omitted fields of information are payments made for alimony or child support. You would also need to disclose any information on a student loan that is deferred.
Lenders want you to be in a position to repay the loans without any troubles. So, even if your other debts seem small or inconsequential, make sure to mention them on your application.
- Not taking pre-approval
Buying a new house is a major decision and is exciting. With all-new things taking place, it is easy to forget what matters. One of the things that matters is getting pre-approval for your mortgage loan.
In the pre-approval process, the lender runs a check of your finances and credit report to ensure that you qualify for the mortgage. Getting pre-approval for your mortgage will save you from getting rejected for a home that you may not qualify for. It also works in your favor and shows home sellers that you are a good candidate for the deal.
- Applying with bad credit
Your credit score is an extremely important indicator of your financial health. Low credit scores can see you get higher rates or even lead to rejection of your application. So, before you shop around for lenders, make sure you contact credit bureaus and ask for your credit report. Often, there could be mistakes that you can easily fix or update.
Taking the effort to improve your credit will be worth the time, as you will get a better deal on your home mortgage. Ignoring this cost can be difficult later.
- Turning self-employed at the time of application
This is one of the most common mistakes made when getting a mortgage. If you quit your full-time job and turn self-employed, a lender might view you as a liability. A salaried person is always less risky as they have a regular income each month. If you are self-employed, you would need to show federal tax returns from the past two years so that your average income can be calculated.
So, if you have been considering a job change, it is best to wait until your mortgage application goes through.